The Different Influence Of Money Supply On The Stock Price

The influence of money supply on the stock market is the financial hotspot which is concerned at home and abroad.The impact mechanism of monetary policy on the real economy is complicated,and scholars'focuses are different.In general,the effect monetary policy transmits to the macroeconomic mainly includes three links as follows.First,that is from the central bank to the financial market,affecting the financial market money supply and demand.Secondly,it is from financial markets and financial institutions to enterprises and other non-financial sector,due to Tobin q effect generated by changes in financial markets,the change of behavior of the main body of the savings,investment and consumption habits.In addition,it is from non-financial sector and other economic actors to the real economy,affecting prices,employment and total output.This paper studies the basic link from monetary policy to financial market.The base money is derived from the banking system,resulting in the money supply of the whole society.After the basic demand,the social entity will generate excess monetary liquidity and the demand for asset allocation.Stock,as an important form of assets,the money supply can affect the stock market price.There are different industries in the stock market listed companies.Therefore,the effect is different because of its industry attributes,capital intensity,development cycle,the size of the enterprise and many other aspects.On the basis of combing the existing literature,this paper analyzes the direct influence,the indirect influence and the different influence of the money supply on the stock price.Then it starts from the characteristics of industry and stock transaction,and discusses the relevance of the money supply and the stock market,and performance in different currencies.Then,the generalized money supply,the SSE index and the 28 SWS industry indices were used to represent the money supply,the overall stock market price,the stock price of different industries respectively,and VAR model is used to quantitative study the effect.The results show as follows.Firstly,the impact of money supply on the stock price in different industries of China is different,and cyclical industry stocks and small-cap industry stocks are more vulnerable to the impact of money supply.Secondly,the current Chinese stock market has the expected effect and.Thirdly,there is a weak correlation between the index of generalized money supply and stock market returns.