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<p>Resilience of a financial market reflects its capacity to withstand external shocks and to recover its essential functions. To operationalize its measurement, this paper employs a dual-metric framework quantifying the adaptability and recoverability of China’s financial markets using a stress-test paradigm driven by global volatility (the VIX). Furthermore, we analyze the impacts of five China-related uncertainties on this structural resilience. Baseline estimates demonstrate that geopolitical risks, economic and trade policy uncertainties, and U.S.–China tensions significantly reduce aggregate market resilience, whereas the effect of climate policy uncertainty remains limited. In contrast, robust domestic consumer confidence plays a vital role in accelerating the post-shock recovery process. Furthermore, we find that market vulnerability to uncertainties is highly state-dependent, becoming significantly amplified during major historical crises characterized by domestic liquidity stress. Finally, the impacts display substantial cross-market heterogeneity, highlighting that the bond market acts as a safe haven during crises. Our findings enrich the resilience measurement literature and provide fresh evidence to inform targeted, counter-cyclical policy design.</p>

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Uncertainty and financial market resilience: evidence from China

  • 期刊论文

  • 发表日期：

    2026年5月26日

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  • Si-Yao Wei,
  • Kun-Liang Jiang,
  • Wei-Xing Zhou

摘要

Resilience of a financial market reflects its capacity to withstand external shocks and to recover its essential functions. To operationalize its measurement, this paper employs a dual-metric framework quantifying the adaptability and recoverability of China’s financial markets using a stress-test paradigm driven by global volatility (the VIX). Furthermore, we analyze the impacts of five China-related uncertainties on this structural resilience. Baseline estimates demonstrate that geopolitical risks, economic and trade policy uncertainties, and U.S.–China tensions significantly reduce aggregate market resilience, whereas the effect of climate policy uncertainty remains limited. In contrast, robust domestic consumer confidence plays a vital role in accelerating the post-shock recovery process. Furthermore, we find that market vulnerability to uncertainties is highly state-dependent, becoming significantly amplified during major historical crises characterized by domestic liquidity stress. Finally, the impacts display substantial cross-market heterogeneity, highlighting that the bond market acts as a safe haven during crises. Our findings enrich the resilience measurement literature and provide fresh evidence to inform targeted, counter-cyclical policy design.