The Construction of the Local Financial Risk Early Warning System Based on Empirical Analysis

This paper discusses the early warning system from several aspects, including index of the early warning system, methods of the system construction, indexation of the index data and the design of the early warning signal system. Meanwhile, the empirical analysis of the local financial risk of Chengdu City based on this system is also presented. The analysis results indicate the overall local financial risk of Chengdu City from 2002 to 2010 is in low level. Moreover, the early warning system plays an essential role in local financial risk monitoring and predicting. Thus, in order to minimize the local financial risk, the early warning system should be established by the local government, together with some other necessary measures.