Economic Transition In The Capital Markets And The Monetary Policy Transmission Mechanism

Since 1990s, the deepening in capital markets has made the foundation of money regulation a profoundly change, and increasingly influenced some economic parameters as economic growth and others, which attracted the attention of the authorities and economics. Capital markets in China developed rapidly and became a side road of monetary policy conduction. However, how about the conduction efficiency and influential factors? After putting forward the issues in Chapter 1, the dissertation explained two key words, economic transformation and capital markets, then presented the dissertation framework.Capital markets as a channel of monetary policy conduction has got the theoretical discuss for long. The theory of monetary policy conduction includes money views and credit views. No matter in which one, capital markets are contained and assets price are contained in the concept of generalized price. In forepart, capital markets relatively less developed and had limited effects, and therefore got less attention. In china, capital markets had become a side road of monetary policy conduction; money channel has been a collateral trench with credit ones which was the only one before. The less effective conduction is the most serious matter in Chinese monetary policies, and the money channel should be expanded and dredged up in upriver, existed blocks and twists in downriver, at the same time credit channel is blocked at downriver, which is the main character of monetary policy conduction mechanism in China. Since it is not in existence in the state-owned sections of the property right pursuing maximum returns during the institution transformation, monetary policies conduction displays the feature of financing supply system. The major problems in monetary policies conduction consist: 1. The blocked channel of interest rate; 2. Absence of some effects as Q effect, wealth effect for the twist in capital markets; 3. The weak impacts of agencies; 4. The restriction of mass expectation; 5. The financial constrains in the mid- and small scale of enterprises.Theoretically, capital markets lower the steadiness, and leads to an infirm affiliation between money supply and output. The reasons include that capital markets enlarges conduction main bodies and make more complex conduction channels, and become more important in monetary policies conduction relative to banks. Assets price is a key variable in the conduction of monetary policies through capital markets, for it has a close relation to flat price and its fluctuation would impact the aggregate demand including investment , consumption and imp- and export. The capital markets channel in monetary policies conduction involves two techs, the first one is assets prices are influenced by monetary polices in access of interest rate and inflation, the second one is assets prices have further impacts on real output by Q effect, wealth effect and liquidity effect.So, macro polices should pay more attention to the development in capita markets in monetary polices conduction.As financial capitals are provided with virtual feature, the efficiency of capital markets in monetary polices conduction depends on whether assets prices reflect the inner value or not, namely, whether bubbles are comprised in assets price and whether assets price are stochastic. Besides capital markets efficiency, rational behavior of the markets participators and the institutional environment can also contribute to the being of assets bubbles. Capital markets efficiency is a system consisting pricing efficiency, operation efficiency, efficiency information, insurance efficiency, and functional efficiency. This system is with the pricing efficiency at the core, with the functional efficiency at the end, and just is the resource allocation efficiency in substance. Only in an effective market, assets prices are dynamically able to hasten to its value, capital markets can exert the functions of price mechanisms, take-over mechanisms, and corporation monitor mechanisms, and allocate the finance resource onto th...