Effect Of Margin Ratio Adjustment On Stock Price Fluctuation In Shanghai And Shenzhen Stock Markets

In recent years,the scale of margin trading in China has been unprecedently increased,and its development is increasingly important for the steady operation of the stock market.However,the stable development of margin and short selling business cannot be separated from margin and short selling margin system.The ratio of margin directly affects the leverage effect of margin and short selling on the development of stock market.Too high a margin ratio will limit some buying and selling transactions,not conducive to market activities;Too low margin ratio will produce excessive leverage and expand market volatility.China is now implementing a unified fixed proportion of the margin system,which requires that the margin ratio in the provision of margin financing and short selling should not only conform to the objective fact that China’s stock market is not mature at this stage,to meet the needs of investment interests of all parties in the stock market,but also to change with The Times,scientific and reasonable timely adjustment of the proportion.Only in this way can margin play its role in resisting market risks in the development of margin lending and short selling business and effectively avoid economic losses of securities companies due to stock market fluctuations.At present,scholars’ studies mainly focus on the impact of the emergence of margin lending and short selling business on the stock market,but there are few studies on the impact of the adjustment of margin lending and short selling ratio on the stock market.On November 23,2015,the Shanghai and shenzhen stock exchanges raised the margin ratio from 50% to 100%.What role does this increase in margin play in the fluctuation of Shanghai and shenzhen stock prices? This is the focus of this paper.This paper first introduces the development background,research ideas and research methods of margin system.Secondly,this paper summarizes the relevant theoretical literature at home and abroad from three aspects of stock market price volatility,margin margin and margin margin ratio adjustment on stock price volatility,and makes a literature review.Then,the paper analyzes the current situation of margin margin and stock price fluctuation in Shanghai and shenzhen stock markets.On this basis,the function of margin margin is expounded,and the influence mechanism of margin margin ratio adjustment on stock price fluctuation is explained from the perspective of stock price rising and falling,and the research hypothesis is further put forward.Thirdly,the single difference method and breakpoint regression are used to empirically test the effect of the margin increase on the stock price fluctuation in China.Finally,based on the conclusion of empirical study,this paper puts forward some policy Suggestions for the development of margin system in the future,hoping that China’s margin system can play an effective role.The empirical study of this paper draws the following conclusions:(1)The overall increase in margin ratio in the Shanghai and shenzhen stock exchanges has played a significant positive role in restraining the stock price fluctuations in the Shanghai and shenzhen stock markets in the short term.Both the policy regression results based on single difference method and the output results of breakpoint regression confirm the main conclusions of this study.(2)The empirical research results show that the effect of the policy of raising the margin ratio on the stock price volatility of the Shanghai and shenzhen stock markets does not directly affect the liquidity of the two stock markets to curb the volatility,which indicates that the policy has no direct impact on the stock liquidity in the short term.