A Research On The Influence Of China’s Monetary Policy On Stock Price

With the development of the stock market,the stock market is more and more important in international economy.The stock market not only affects the macro economic development but also affects the wealth of the residents configuration.Since entering the new century,the global scope,the stock price has experienced several big fluctuations.The stock market of our country in the new century has had two larger fluctuations,which were happened in 2005-2008 and in 2014-2015.The two swings are the stock price rose sharply and then fell sharply in a short time.The volatility of the stock market has an uncertain impact on the economy.Our country’s economy has entered a phase of economic growth slowing,the fluctuations of the stock market make economic development face more uncertainties.Today,stock market is very important to our country.More and more people buy stocks.Stocks are becoming very important to lots of people.The stock has become an important asset for people.If the stock price falls,many people will suffer heavy losses.Stock decline stage in 2015,in order to make the decline stop,our country implemented a series of monetary policy,but the effect is not obvious.Therefore,China’s monetary policy whether can affect stock price become the object of academic attention once again.The non-market of the stock market,the non-market interest rate,and the monetary policy is not flexible caused a new round of discussion upsurge.This article collected the existing domestic and foreign literature in the first.The study of these documents found that the stock market whether can affect the stock price of the issue of agreement in both domestic and foreign literature has not reach an agreement.Domestic and foreign scholars use a large number of empirical analysis to study this issue,such as VAR,SVAR,Event Study and so on.In order to illustrates the theoretical basis of the impact of monetary policy on stock prices,this paper first studies the impact of monetary policy on stock prices in theory.These theories mainly include Fisher’s equation,Cambridge equation,modern currency quantity theory and so on.And then studied the stock price transmission mechanism of monetary policy.This theory mainly includes wealth theory,balance sheet effect theory,Tobin q theory and so on.Theoretical analysis laid the foundation for the next empirical test.The innovation of this paper is to establish the VAR model of Shanghai and Shenzhen 300 price index andmonetary policy and the VAR model of small and medium plate index and monetary policy respectively,and validates the influence of monetary policy on the price index of Shanghai and Shenzhen 300 and the price index of small and medium-sized board.CSI 300 price index can represent China’s overall stock market situation,small and medium-sized board price index can represent China’s small and medium enterprises stock market situation.Through the analysis of these two indices,we can understand the impact of monetary policy on China’s overall stock price,but also can understand the impact of monetary policy on small and medium plate.The monetary policy variable chosen in this paper is the monthly growth rate of M2,the 7-day interbank offered rate and the deposit reserve ratio.Through the analysis of these currency variables,to understand the different monetary policy tools on the stock price generated by the utility.Through the empirical analysis can be found that China’s monetary policy,whether it is the overall stock market or the impact of the specific stock market is not significant.This is contrary to the traditional economic theory,indicating that China’s monetary policy on the stock price transmission channels are not smooth.The concrete conclusion is:(1)China’s stock market,the low level of market,the stock issuance system is unreasonable,junk stocks frequently and the strength of the enterprise listed difficulties,the stock price and the true value of the enterprise deviated from the monetary policy can not affect the stock price.(2)China’s monetary policy mechanism formed late,monetary policy transmission mechanism is not perfect.First,the interest rate has not yet achieved market-oriented,so it can not represent the true price of the currency and the People’s Bank can not correctly understand the real money supply and demand situation.Second,China’s bond market is underdeveloped and lack of short-term bonds,so that the open market business this monetary policy tool can not be fully effective.(3)China’s money market and the capital market was artificially fragmented,making the money can not flow freely in the money market and capital markets.When the state applies monetary policy,the effect of monetary policy can not be passed to the capital market,so that monetary policy can not affect the stock price.(4)China’s individual investors far more than the number of institutional investors,so investors irrational structure.According to the conclusion of empirical analysis,this paper puts forward some suggestions,details as follows:(1)We should speed up the process of marketization of the stock market and implementation of the stock issuance registration reform,so that the stock price can reflect the true value of the enterprise.(2)We should be realized the marketization of interest rates as soon as possible,so that interest rates can truly reflect thecurrency prices.(3)We should speed up the process of money market and capital market integration,so that monetary funds can flow freely between the two markets.(4)We should accelerate and standardize investment and financial markets,popularize financial knowledge.