Research On The Influence Of Institutional Investors On Stock Market Volatility

China’s stock market has been in operation for 27 years since the official start of the Shanghai Stock Exchange on December 19,1990.During the period,China’s stock market experienced a total of 9 rises and 9 falls,otherwise Small-scale drop is also countless.The stock market is a barometer of national economy and an important place for financial integration,which is also an indispensable part of the healthy operation of the financial system.However,the wild fluctuations of the stock market not only can not reflect the economic development,but also have a negative impact on the development of the economy to a certain extent,which will cause major trauma to the health operation of the financial system,and even cause financial panic,which will lead to financial crisis.In the early period,the sharp fluctuation of the stock market in our country mainly resulted from the fact that the main investors in the market were individual investors such as retail investors,and the speculative atmosphere was strong.Therefore,in order to reduce the volatility of the stock market and promote the stable development of the capital market,the development concept of the super-conventional development institutional investors was put forward in 2001.Compared with individual investors,institutional investors have the advantages of large scale of funds,high degree of specialization and high capability of acquiring information and high efficiency,thus playing a stabilizing role in the stock market.After more than a decade of development,the number and size of institutional investors are rapidly increasing,which has become an indispensable part of the capital market.However,during the period many scholars also pointed out that institutional investors can not only stabilize the market but also exacerbate the market volatility.On this basis,this paper examines the relationship between institutional investors and stock market volatility from macro and micro perspectives through theoretical and empirical methods.First of all,the theoretical aspects summarize the theoretical and empirical literatures of domestic and foreign scholars on the relationship between institutional investors and the stock market volatility in chronological order,and Then it gives a detailed description of the operation of China’s stock market and the development of institutional investors in our country.In addition,it introduces the theoretical mechanism of institutional investors’ influence on the stock market,which increases the theoretical depth of the article.In the empirical aspects from the macro perspective we use VAR model to test the relationship between the overall size of institutional investors and the size of investors in seven different types of institutions and the volatility of the Shanghai Composite Index.The result shows that the increase of the size of the capital invested by institutional investors as a whole has a stable effect on the stock market,however,the impact of different institutional investors on stock market volatility is different.In the long term,securities investment fund,sunshine private fund and QFII play a role in stabilizing the stock market,whereas insurance,brokerage,insurance and trust will exacerbate the volatility of the stock market.In the short term,in addition to sunshine private fund and trust,which will reduce the stock market volatility,other institutions will have a positive impact on stock market volatility.In the aspect of micro,we use Dynamic panel model to analyze the volatility of institutional investors’ shareholding ratio and its changes to all the A shares in Shanghai and Shenzhen.The results show that the stocks with large shareholding ratio of institutional investors are more volatile,while the change of institutional shareholding ratio is conducive to the stability of individual stocks.On the basis of the analysis of the empirical results,the paper finally put forward relevant policy suggestions from three aspects: the development of institutional investors,the strengthening of information disclosure and the construction of legal system.