Research on Brittleness of the Financial System Based on Catastrophe Theory

On the basis of analyzing the complexity of the financial system, we study the factors that induced the financial storm based on catastrophe theory, and analyzed the causes of the financial system´s brittleness. By constructing the potential function of financial fragility model, we study the brittleness critical points on which mutation of the financial system happened in quantitative methods. Finally, through an example of cusp catastrophe, we analyze the financial storm caused by sub-prime mortgage crisis, and suggest that by controlling brittleness critical points that causes the financial storm to achieve the purposes of controlling and predicting the financial storm.