The Flow of Funds Matrix and Financial Risk Measurement

Nan Zhang ()
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Nan Zhang: Hiroshima Shudo University, Faculty of Economic Sciences

Chapter Chapter 3 in Flow of Funds Analysis, 2020, pp 89-133 from Springer

Abstract: Abstract This research transposes the data from China’s Flow of Funds Account and Flow of Funds Matrix and clarifies the features of assets and liabilities between sectors. Then, using the Leontief Inverse principle, the author builds a ripple effect model for measuring financial risk, conducts a multiplier analysis to explain the risk ripple effects of each financial transaction item rankings, and analyzes the final ripple effect of systematic financial risk in China’s whole financial market. The results show that the systemic risk assessment of financial transaction instruments in China in 2017 exceeded the situation of the 2007 United States sub-prime crisis, which required special attention from policymaking authorities.

Keywords: I-O table; Flow of funds matrix; Leontief inverse matrix; From whom-to-whom; Systemic risk; Ripple effects (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-15-7720-8_3

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DOI: 10.1007/978-981-15-7720-8_3

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