Our Liquidity And Financial Asset Price Volatility Correlation

This article starts from the current excess liquidity phenomenon of our country, considering the relationship between liquidity and the financial asset prices volatility. I divide the liquidity into microscopic and macroscopic, in order to re-classify the connotation of the liquidity. This paper is mainly based on the relationship between macro-liquidity and the financial asset prices volatility, discussing the mechanisms and reaction mechanisms of the impact of the liquidity to the financial asset prices volatility, heckle the intricate channels between them, and finally make an empirical test on these mechanisms on the basis of theoretical analysis.The empirical test is divided into two parts. The first part tests the relationship between liquidity and the financial asset prices volatility under the context of the share reform. Through the study we can find that after the share reform, the relationship between liquidity and the financial asset prices volatility is not the same as before the share reform. Before, the fluctuations in the stock price influence the liquidity, while after the share reform, there is an opposite change. This change indicates that: first, the share reform has not only changed the flow of the market size, but also the microscopic mechanism of the market; second, currently the liquidity has an impact on the financial asset prices, so when considering the increase of financial asset prices, we should give full consideration to the liquidity factors. The second part of the context tests the relationship between liquidity and the financial asset prices volatility under the context of the different monetary policies. Through empirical testing we can find that in the context of different monetary policies, financial asset prices volatility has absolutely positive effect on liquidity, but this kind of effect is very weak.