The Analysis Of Monetary Transmission Mechanism Through The Stock Market In China

Chinese traditional transmission of monetary policy mainly rely on the commercial banks. The People's Bank of China alters monetary polices inorder to change liquidity of commercial banks,and then affects the real economy. Since 90s of the 20th century our country's financial market has undergone some changes . Shanghai Stock Exchange Market and Shenzhen Stock Exchange Market established one after another. With the improvement of the stock market our financial environment becomes more and more complicated. It's more difficult for monetary authorities to implement Monetary polices. The development of the stock market changed the functions of monetary policy tools .Increased intermediary subjects of the monetary policy transmission .Influenced monetary policy transmission effect . It's meaningful to make our stock market more sensible in order to ensure the monetary policy transmission .This paper tries to research monetary policy transmission through the stock market with related theories of western mature markets.This article is divided into five parts. The first part is the introduction section which introduce the background of the topic domestic international research status and innovations and deficiencies.The main part of this article is the contents from first chapter to the fourth chapter. The first chapter reviews the main monetary policy transmission theories. The second chapter generally analysis that the Monetary policies conduct through stock market in China with lots of datas and charts. The third chapter analysis it with Johanson cointegration test . Through the analysis we know that the monetary policy transmission through the stock market is not very successful because of the unsuccessful external transmission.In the end of this chapter this article analyzed the specific reasons of the unsuccessful conduction. The last chapter offers some suggestions to change the situation of unsuccessful conduction.Those suggestions include :explore coupling mechanism to connect monetary market, capital market and product market ,enlarge stock market investors capacity,improve investors structure,maintain the stock market long-term stability,propose rational investment,improve macro investment environment and so on.