Abstract: From the perspective of psychological expectation, this paper explains the systemic financial risk caused by contagion in a country after financial crisis. The built static model illustrates the production mechanism of systemic financial risk when investors are in lack of confidence. The dynamic model shows that the change of people’s psychological expectations will affect stock prices in capital market and the prices will influence the probability of systemic financial risk in the future. If “enterprises”operate successfully in the first phase investors’ confidence will be maintained, which will increase the investment in liquid capital. If the “enterprises”fail in the first phase, the discouraged investors will reduce the investment in liquid capital. The contagion of the psychological expectation will cause systemic financial risk.

Key words: Psychological Expectation, Systemic Financial Risk, Crisis Contagion