Systemic risk

Basic Overview

Systematic risk is the market risk, that is, the impact of environmental factors such as overall politics, economics, and society on securities prices. Systematic risks include policy risks, economic cycle fluctuations, interest rate risks, risk, exchange rate risk, etc. The identification of systemic risk is to judge the macroeconomic situation during a certain period of time. That is to point to the entire stock market or most stocks universally adversely. Generally, the relationship between the economy is generally related to the overall factors. Such as the world economy or a serious crisis in a certain country, continuously high inflation, extra large natural disasters. The consequences of overall risks have universality, and its main feature is that all stocks have fallen, and it is impossible to purchase other stocks. In this case, investors have to suffer great losses, many of which have to strive to throw stocks in their hands.

Economic cycle fluctuations in systemic risks are extremely serious, and any stock can't escape its hit. The risk assumed by each stock market investor is basically equal. This overall risk is less probably less. Due to the advancement of human society, it has great enhanced actions for the prevention methods of natural and social driving capabilities and the overall risks.

The so-called systemic risk refers to the possible changes in investment income due to global common factors, which affects the income of all securities in the same way.

Basic Features

Systematic risk is: the entire stock market or most stocks generally adversely affect. The consequences of systematic risk have universality, and the main features are almost all stocks fall, and investors often have to suffer great losses. It is because this risk cannot be canceled or eliminated by dispersion investment, but it is also known as unsubstantial risks.

Basic classification

Systematic risk is mainly caused by macroscopic factors such as political, economic and social environment, including policy risks, interest rate risks, purchasing power risks and market risks.

Policy risk

The change in economic policies and management measures can affect the company's profits, investment income changes; changes in securities transaction policies can directly affect the price of securities . Some seemingly irrelevant policies, such as the policy of private buying houses, may also affect the relationship between funds for securities markets. Therefore, economic policies, regulations are introduced or adjusted, and there is a certain impact on the securities market. If this effect is large, the overall fluctuations in the market will cause the market.

Interest rate risk

market price changes are subject to market interest rate levels. In general, when the market interest rate is improved, it will have a certain impact on stock market funding.

Purchase Risk

Due to the rise in price, the same amount of funds may not be possible to buy the same goods in the past. This price change has led to the uncertainty of the actual purchasing power of funds, called the risk of purchasing power, or inflation risk. In the securities market, due to the return of investment securities is paid in the form of currency, in the inflation period, the purchasing power of currency declines, that is, the actual benefit of investment, and there is also a possibility that the investors have caused losses.

Market risk

Market risk is the most common, most common risk in securities investment activities, is directly caused by the glory of securities prices. Market risks will increase when the overall value of the market is overestimation. For investors, systematic risks cannot be eliminated, and investors cannot prevent the investment portfolio, but can reduce systemic risk effects by controlling capital investment ratios.

Preventive measures

For the prevention of systemic risk, you need to pay attention to the following aspects:

Improve vigilance

When the overall market occurs The big increase, the volume has repeatedly created the amount of days. The money is popular in the stock market. The market is popular, and investors are actively entering the market. When the investors are gradually indifferent, they are often somewhat signs of systematic risk. From investment value analysis, when the overall value of the market has an overestimation trend, investors cannot relax the vigilance of systematic risk.

Investment ratio

In the operation of the stock market market, there is always an uncertain factor, and investors can continuously adjust fund investment in accordance with the stage of development. Since the stock market is large, the investor should not use the way to operate from the perspective of effective control risks, and the full-time full position is more uncomfortable. This period is required to control the proportion of funds within the range of risk. Investors with heavy positions can choose to throw some stocks, alleviate their positions, or use some investment funds for relatively secure investments, such as subscribe of new shares.

Winning Preparation

Investors cannot predict when systemic risk, especially during the rapid market. If stocks in hands in advance, investors cannot enjoy the pulsation opportunities of the "crazy" market. At this time, investors can continue their shares under the premise of controlling the position, but ready to stop winning or stop loss, once the market has systematic risk, investors can decisively sell, thereby preventing further loss expand.

Systematic risk

"Systemic risk" refers to an event in a series of institutions and markets that cause a series of continuous losses in systems. Risk overflow and infection are the most typical features when systematic risk occurs, and another important feature is the asymmetry of risk and revenue. Compared with the management of individual risks, the supervision of classified systematic risks is more difficult, more complicated, requires regulatory philosophy, and some of the fundamental changes in regulatory methods.

An important feature of the global economy and financial system development is that the development speed and scale of virtual economies are much larger than the entity economy. In the relationship between the virtual economy and the entity economy, the research of academia at home and abroad has paid more attention to the development of the virtual economy. It has become more and more deviated from the development of the physical economy. The academy even thinks this "pouring pyramid" economy, the financial system has the possibility of collapse. However, in people's research, more emphasis on virtual economy and physical economics, especially between the liberalization of international financial markets and the economic performance of industrialized national economic performance.

The benefit of the economy

On the one hand, the development of virtual economy is indeed benefiting the entity economy, such as the establishment and development of the international monetary market and related income streams have created unprecedented Real purchasing power, with the United States as an example, financial, insurance, real estate department's contribution to the US GDP is far more than manufacturing; on the other hand, since 1970, when financial innovation and liberalization of financial markets, world scope The economic growth rate began to decline. The main industrial development of the 1990s declined by about 2/3 in the 1960s, and the average growth rate of developing countries also decreased substantially considerably.

It is difficult to define a very clear definition of systemic risk. In the existing literature, it is generally believed that "systemic" one side refers to an event affects the function of the entire system. On the other hand, an event has made a certain amount of cost, "systematic risk" It refers to an event that causes a series of continuous losses in the system of a series of institutions and markets (George G.kaufman). Therefore, systematic risk is a "external", which is a single company (institution) imposed on the cost of the whole society than its actual value, risk overflow and infection is the most typical characteristic of systematic risk, and This feature of systematic risk is not limited to the economic and financial field of a country. Especially since the 1980s, the trend of global economic integration and financial globalization has greatly vulnerable to the impact of international economic environment; the price linkage of the foreign exchange market, the chain reaction rate of financial system risk Accelerated; the high-tech level of modern communication technology and financial transactions also created conditions for the spread of information and risk, and the turmoil results of a certain market will quickly spread through the computer network system, affecting the economic and financial situation in other parts of the world. .


Another important feature of systemic risk is the asymmetry of risk and income, which is also one of the important causes of systematic risk often harm the entity economy. .

The existence of systematic risk may threaten the overall development of financial and economical market mechanisms. This lack of completely free market mechanisms mainly rely on strong regulatory authorities. Forcing microscopic subjects will consider systemic risk, it is the responsibility of financial regulators; the more strict risk management of the supervision authorities, the higher the cost of the private sector, the more the externality of systemic risk is internalized. In order to ensure that a single investment decision maker not only considers the risk of its individual, but will consider the risk of the entire society, supervisors may or can add additional conditions. For example, the regulatory authorities may require banking departments and other financial institutions to meet certain standards (ie, their mobile capital is required to hold all the specific proportions of all assets), and this fluid capital holds for these financial institutions, It means that some potential investment activities must be abandoned. This is a cost, regulators hope to resist the impact of the financial crisis; regulators or attempts to make certain restrictions directly to investors. For example, the private sector will take into account the cost and short-term capital flow of short-term capital flows and short-term capital flows may be considered in consideration of social costs caused by a country; in some cases, regulators can even or can be specific to specific Capital flow implementation direct control.

Regulatory defects

Compared to the management of individual risks, the supervision of systemic risks is more difficult, more complex, and requires some fundamental changes in regulatory methods. The cause of systematic risk supervision is first manifested in the difficulty of systematic risk estimation. Regulators must include a specific risk to transformation into systemic risk, and act as a "guard" between these two risks, and to prevent the loss of financial panic caused by market confidence, the central bank will perform the final lender by injection into liquidity funds. Responsibilities is to have important.

However, in many cases, when individual financial institutions are in trouble, central banks may not easily find appropriate channels to inject liquidity funds, so that they do not perform the final lenders' responsibilities. This is the system. Another difficulty of sexual risk supervision. In particular, when there is a problem with the problem of field foreign transactions of financial derivatives, central banks may not be able to provide assistance with their own own resources to inject funds. Therefore, the regulatory authorities are necessary to assist in organizing private sectors into aid, avoiding and mitigating the loss of systemic risk.

The final lender system for systematic risk supervision and the similar deposit insurance system still have another defect. When the regulatory authority attempts to handle systemic risks, it is often necessary to provide financial support, so Moral risk issues are inevitably. Systematic risks are not simple private risks, but rather than the sum of private risks. Similarly, the risk of private management is less than the total risks of the financial industry, because as mentioned earlier, private only avoids risks without eliminating risks. The purpose of the final lender, deposit insurance system is to control such social risks, but the final lender, deposit insurance system, etc., only to some extent, the risk is transferred from the private sector to the public sector, and part of the systematic risk is transferred to Moral Hazard. Therefore, effective supervision should distinguish between different situations to provide final lenders, and apply punitive interest on assistance objects; deposit insurance and other systems should not provide assistance for financial institutions or personal speculators, only for families with non-processed investment. Provide assistance.

One of the main regulatory measures against systemic risks is to clearly divide the financial market and divide each other, such as "Glas Stegrf" in commercial banks and other financial services Set "firewall" between the industry, prohibit mixing operations. However, since the 1990s, due to market liberalization, the distinction between banks and other financial institutions has become more and more blurred, and the globalization of financial markets and integration is growing, so that both the country Still international, all split parts are closely related to each other. In particular, in the modern financial market, a prominent feature is that financial innovation activities are increasingly active, and the incidents that have never happened or never foreseen have been constantly occurring, but often is a new incident that leads to the biggest risk. This makes the supervision and concept of financial system risk have been further challenged, and the traditional segmentation is regulated by commercial banks, investment banks, insurance companies and other financial institutions, such as in different types of financial institutions in different types of financial institutions in different types of financial institutions. The action of proportional fluctuations is more difficult, and it is increasingly invalid. Here, people think of particularly emphasize that regulators must have some flexibility and must be based on the principles of risk management, rather than implementing supervision based on pre-set rule frameworks. The root cause is that as a financial system at the core of the modern economy system, it is no longer a simple service system, but a system that considers risk management and its own development. Therefore, supervision can not be limited to the management of financial services, functions, but should adhere to the principles of risk management. At the same time, regulators must adhere to market-based flexibility, respond to market changes, because any discretionary rules and rules based on certain products cannot be adapted to changes in the financial market of the sun.

Corresponding risk

reality, the operational status of each company will be affected by its own business, these factors have no relationship with other companies.

This risk mainly affects a certain securities product, which does not directly contact other securities products in the market, and investors can offset non-systematic risks through a method of decentralized investment.

Non-systemic risk has business risks, financial risks, default risks.

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