Editorial

Citation

Jin, X. (2014), "Editorial", China Finance Review International, Vol. 4 No. 4. https://doi.org/10.1108/CFRI-09-2014-0075

Editorial

Article Type: Editorial From: China Finance Review International, Volume 4, Issue 4

The US subprime mortgage crisis has demonstrated the importance of financial stability and systemic financial risks. The rapid development of shadow banking and financial derivatives promotes the divergence between credit supply and money supply, which makes financial system create its own instability and shocks that in turn have a negative impact on the real economy. Therefore, to maintain financial stability and reduce financial risks, especially systemic financial risks, has become an important task of central bank. The Chinese banking sector has experienced a credit boom in 2009 and now is a bit overwhelmed by bad loans. Moreover, there is the debt risk of local government financing platform. The uncertainty and instability of China's financial system is brewing systemic financial risks.

In this issue, the topics of financial market stability and risk are covered by the five papers. The first paper entitled “The influence of the market power of Chinese commercial banks on efficiency and stability” estimates the cost and profit efficiency of Chinese commercial banks in the last ten years and investigates how market power affects bank efficiency and stability. The paper entitled “Heterogeneous dividend preferences of Chinese individual and institutional investors – evidence from categorized daily share holding data” examines preferences of Chinese individual and institutional investors to cash dividends and stock dividends. The paper entitled “The price of correlation risk: evidence from Chinese stock market” re-examines the correlation problem using data from Chinese stock market. The authors find that market correlation increases when the market index falls down. The market correlation risk is negatively priced. The paper, “Multi-period investment decision problem based on time consistent generalized convex risk measure and extremum scenarios” constructs a multi-period investment decision model with practicality and superior performance, which can help investors find an investment policy with strong competitiveness. The paper entitled “Measuring systemic financial risk and analyzing influential factors: an extreme value approach” computes single financial institutions’ contribution to systemic risk using extremal quantile regression and analyzes the influential factors of systemic risk.

Xuejun Jin