Competition, Internal Institutions And External Institutions

The positive results show that China's securities market (CSM) isn't helpful to improve China's economic growth. Economic structural bias is very outstanding in China. Securities market affects the adjustment of industrial structure through structural interrelations, structural elasticity and structural development. The price signal in secondary market can lead to the industrial shift of listed companies, although there exists an overreaction. In nature, institutional investors have no functions that stabilize the price fluctuation of securities market. After the introduction of securities investment funds, the change in systematic risk and their behaviors support this view. Theoretically, the security market may improve the governate structure, but the relationship between capital structure, govemate structure and performance is not strong. Capital structure is strongly related to MOIG, Tobin q is negatively related to debt - asset ratio. These relationships are different from the conclusions of theoretical study and foreign positive results. The institutional changes of CSM are divided into two periods. In the first stage, the participators of CSM make institutional transactions of private contracts. The accumulation of knowledge helps people form new views on the costs and profits. These new views as a kind of institutional knowledge constitute people's new ideology, but this institutional transaction shows strong path-independence, which leads to locking-in status. When the costs of institutional transaction are more than the profits, market participators will resort to the institutional changes in general equilibrium. So the institutional changes of CSM enter into the second period. The internal factors constrain this changing mode. The internal factors decide the orientation, path, speed and sequence of CSM's evolution. The participators of securities market rationally choose the optimum strategy under the limitation of institutions and play multiple games- The multiple-game equilibrium decides the present status of CSM. These internal factors result in insufficient competition between financial markets. If there exist no competition between property rights, the pursuit of national monopolistic rent will lead to behavioral dissimilation. So in this sense, whatever the laws and rules are complete and supervision is stem, the measures taken to resolve the problems of CSM are difficult to lead to the equilibrium and efficiency of CSM. The resolution of problems from CSM must go beyond CSM itself. The way. to improve the efficiency of CSM is to break the path-independence, and to form new internal institutions and external institutions, and to reconstruct the pattern of profit allocation to correct theirbehaviors, and to come back to the principles that maximize their own profits according to the social economic logos, and to finally form efficient "first-side supervision", "second-side supervision" and "third-side supervision". That is to say, when the system opens outside, with the push of external institutions, customs and ideas, after the opening degree and time reach the critical point, this system will enter into a brand-new and high-level equilibrium. In this process, the efficiency of CSM will be improved.