The Empirical Study On The Effect Of Monetary Policy To The Stock Prices

Abstract:With the development of the stock market, it not only has become an important barometer of China’s real economy, but also an important carrier in the process of China’s monetary policy transmission. At the same time, monetary policy, as an important means of central bank regulating economic, the information publishing and implementation will cause the change of the stock market. Therefore, to study the influence of monetary policy on the stock market will be more important and meaningful by using econometric model from the macro and micro perspective. In this paper I will firstly choose the relevant stock market index, and then join two institutional variables of monetary policy into the SVAR model. In the beginning I will make a study from the empirical analysis for the stock market as a whole, then based on financial backgrounds crisis to study the effect of the monetary policy on the stock market, in the end1select six representative industry specific empirical analysis stock plates, it will help us understand the influence of monetary policy on the stock market more accurately and comprehensively.Based on the empirical result,the main conclusions are:①Under normal circumstances, the adjustment of interest rates has the positive influence to the stock market, while changes of the deposit reserve rate has the negative influence, and the latter is greater than the former;②The stock market is influenced by monetary policy differently under different economic background, from the early joint-stock reform to the subprime crisis, the monetary policy has sensitive and positive effects,the switching frequency is big, under the background of financial crisis, the influence of monetary policy on the stock market is small, with the stock market improving, the impact of monetary policy is small in the recovery stage;③Different plate of stock market also has the obvious impacts, for larger interest rate sensitive sector of banking and real estate, the adjustment of the interest rate can be timely reflected in the plate index, it has the superposition positive effects on the securities sector, similarly the change of deposit reserve rate has negative effect, while the traditional traffic plate is influenced positively by the change of interest rate negatively by the adjustment of reserve requirement ratio. From the angle of the government regulation of market and the economy, then I will put forward the following suggestions, the first step is to improve the monetary market and stock market, strengthen the interest rate signal function, the second step is to improve the precision of monetary policy and strengthen the central bank’s credibility, and finally is to develop the institutional investors, and expand the scale of the stock market.