Financial Stress in China and International Spillover

Guseon Ji, Linxiao Cong, Jinu Kim, Kwangwon Ahn

Research output: Chapter in Book/Report/Conference proceedingConference contribution


This paper proposes a novel financial stress index (FSI) of the Chinese economy that effectively identifies the recent major financial crises. Using the Chinese FSI, we analyze the international transmission between the financial stress in China and the US/euro area’s financial condition and stock market sentiment. We find that the Chinese FSI is informative in explaining the international spillover effects and the spillovers are stronger during crisis periods. While the international transmission of financial stress is mainly from US/euro area to China, the spillover effects during Chinese cash crunch and European sovereign debt crises particularly have the opposite direction of the international spillovers. Our evidence suggests that the spillovers from financial stress in China to euro area’s financial condition and stock market sentiment are attributed to their trade and financial linkages.

Original languageEnglish
Title of host publicationIntelligent Systems and Applications - Proceedings of the 2022 Intelligent Systems Conference IntelliSys Volume 2
EditorsKohei Arai
PublisherSpringer Science and Business Media Deutschland GmbH
Number of pages20
ISBN (Print)9783031160776
Publication statusPublished - 2023
EventIntelligent Systems Conference, IntelliSys 2022 - Virtual, Online
Duration: 2022 Sept 12022 Sept 2

Publication series

NameLecture Notes in Networks and Systems
Volume543 LNNS
ISSN (Print)2367-3370
ISSN (Electronic)2367-3389


ConferenceIntelligent Systems Conference, IntelliSys 2022
CityVirtual, Online

Bibliographical note

Publisher Copyright:
© 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.

All Science Journal Classification (ASJC) codes

  • Control and Systems Engineering
  • Signal Processing
  • Computer Networks and Communications


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