The Open Cybernetics & Systemics Journal

2014, 8 : 689-694
Published online 2014 December 31. DOI: 10.2174/1874110X01408010689
Publisher ID: TOCSJ-8-689

An Improved Statistical Model for Evaluating Financial Deepening Effects and Economic Risk Prevention

Xuxian Yan and Xianjun Li
College of Management Science and Engineering, Shanxi University of Finance and Economics, Taiyuan, Shanxi province, 030006, China.

ABSTRACT

Along with China’s economy development and the deepening of reform and openness, the financial institutions development rapidly and gradually become an important support force to promote the economic development. However, credit risk becomes a quite important uncertain factor that affects commercial banks. In this paper, we analyze the impact of financial system on economic fluctuations by using time series model. The result shows that LnFIR at lag 1 period increased one percentage can drive LnGDP growth by 0.652, LnFIR at lag 2 period increased one percentage can drive LnGDP decrease by 0.217 percentage, so the effect of financial development on economic growth is obvious. In addition, we researches on the performance and characteristics of credit risk under the condition of the macro-economic uncertainty and how the commercial banks prevents credit risk by perfecting systems.

Keywords:

Commercial banks , economic uncertainty, empirical analysis, financial deepening, risk prevention.