Macro-Prudential Regulation from the Perspective of the Financial Network

Abstract

From the perspective of financial network stability analysis achieved by studying the network formed with linkages of individual financial institutes, this article aims to delve into the monitoring, warning, and analyzing of the systematic risk of the financial system as a whole, which is the key to drive macro-prudential regulation forward within the regime of existing financial regulations. Through our analysis we've achieved the following. First, a new way of depict of the structure of financial system's network and a practical method of macro-prudential regulation is proposed. Second, by analyzing the stability of the banking network, it can be seen that after the explosion of the economic crisis, the country's macro-economic policies to improve the stability of China’s own financial network produced positive results. Third, through an initial empirical analysis of the national banking network, the country's inter-banking network displays a structural characteristic of the coexistence of important nodes and locally closely-connected clusters.