How Does Capital Account Liberalization Affect Systemic Financial Risks? Evidence from China

Table 1

Basic systemic financial risk index set.

	Index	Significance	Possible relationship
Macroeconomic risk	GDP growth rate	Measuring a country’s overall economic conditions	Change in the reverse direction
	Budget deficit growth rate	Judging the orientation and intensity of fiscal policies	Change in the same direction
	CPI growth rate	An important index reflecting currency inflation	Change in the reverse direction
	Industrial added value growth rate	Reflecting the value of industrial production for macroeconomy	Change in the reverse direction
	Fixed asset investment growth rate	Re-production of fixed assets	Change in the reverse direction
Credit crunch risk	Quasi-currency growth rate	Latent currency directly affects currency circulation	Change in the reverse direction
	One-year fixed-term deposit interest rate	Reflecting the long-term financial supply and demand between banks and depositors	Change in the same direction
	One-year benchmark interest rate for loans	Measuring the relationship of benefit distribution between companies and banks	Change in the same direction
	Loan growth rate	Positively correlated with bad debts	Change in the same direction
	Inter-bank offered rate	Short-term supply and demand of internal funds in financial market	Change in the same direction
	M2 growth rate	Reflecting changes in purchasing power	Change in the reverse direction
Sudden stop risk	FDI growth rate	One of main forms of capital internationalization	Change in the reverse direction
	Growth rate of amount of import	An important index measuring trade activeness	Change in the reverse direction
	Real effective exchange rate index	Reflecting the international value of domestic currency	Change in the same direction
	Growth rate of foreign exchange reserves	A crucial measure for resisting external risks	Change in the reverse direction
	Growth rate of amount of export	An important index measuring trade activeness	Change in the reverse direction
	International balance of payment	Shares of capital flows in international trade	Change in the same direction
Asset bubble risk	Rate of returns of SSE Composite Index	Ratio of returns on investment in stock market	Change in the same direction
	SSE average P/E ratio	Ratio between market value per share and earnings	Change in the same direction
	Rate of returns of SZSE Component Index	Ratio of returns on investment	Change in the same direction
	SZSE average P/E ratio	Ratio between market value per share and earnings	Change in the same direction
	Growth rate of real estate investment	Reflecting the trends of real estate investment	Change in the reverse direction
	Growth rate of house price	Reflecting price level in real estate industry	Change in the same direction