A Research On Operation Of International Capital Market

Sustainable economic development of a nation hinges on positive interaction between real and virtual economy where virtual economy lives, evolves, and grows with real economy in a reciprocal and complex manner. Discussion of such interaction without practical issues has little practical value. A large number of present theoretical researches and practices in this area have suggested that financial market has functioned as the link between virtual and real economy, and consequently, the fitness of capital market will be a strong driving force behind the positive interaction between virtual and real economy. Following this point, this Dissertation is in an attempt to present in-depth analysis of global capital market and the successful experiences of capital markets in developed nations in promoting positive virtual and real economy interaction, as well as the discussion regarding making adjustments to t h e f u n c t i o n i n g m e c h a n i s m o f C h i n a ' s c a p i t a l m a r k e t . Study on the role of a capital market in the interacting process between virtual and real economy in this Dissertation takes three steps: first, the author looks at the areas and mechanisms of virtual and real economy interaction; second, based on present related research and theories, the author carefully reviews roles of capital markets around the world in virtual and real economy interaction, and implication of which for China' capital market in making adjustments to its functioning mechanism. This Dissertation also has combined theoretical and empirical analysis with applications of techniques including diagrams, comparisons, and cases, etc., so that the study may lead to conclusions strong enough for both theoretical and practical examinations. It should be noted that this Dissertation concentrates on the functioning mechanism of capital market specifically with respect to the interaction between virtual and real economy. Generally, definite circumstances should be given for the examination of a certain subject's functioning mechanism under certain circumstances. However, in light of the situation that virtual and real economy interaction represents a broad topic, while scientific study on which has just begun with many unsettled disputes, the author has tried to explain the specific role of capital market related to the interaction after providing a brief picture of the virtual and real economy interaction with reference to past researches and studies. In short, this Dissertation is meant to be a preliminary study on virtual and real economy interaction in China rather than inclusive or conclusive. This Dissertation comprises 6 chapters including the preface, which describes the significance of its subject, and provides a briefing on the functioning mechanism of capital market, structure and purposes of capital market, and its value in a socialist market economy. Chapter 1, Functioning Mechanism of Capital Market in Interaction between Virtual and Real Economy, theoretically examines the key issues of the Dissertation where the author analyzes the nature of virtual and real economy interaction, the fundamental system, functioning techniques and mechanisms of capital market in terms of its role in real and virtual economy interaction. In addition, Chapter 1 explains functioning of capital market as intermediary, conductor, and inflator for real and virtual economy interaction. Chapter 2 represents an empirical study on the functioning mechanism of capital market in real and virtual economy interaction using mortgage loan securitization and hedge funds as examples. To learn from useful experiences from outside China, Chapter 3 and 4 deal respectively with issues on international capital markets and capital flows, and roles and positions of capital markets in developed countries like Britain, U.S, and Japan in real and virtual economy interaction.Chapter 5 goes back to China's capital market, elaborating the development in China's virtual economy and construction of the capital market with the conclusion suggesting that policy should be adopted to make adjustment to the functioning mechanism of China's capital market. It is concluded that there exists a complex interaction between virtual and real economy, where virtual economy and real economy live, evolve and grow side-by-side. The capital market serves as a key channel for such interaction by functioning as intermediary, conductor and inflator. A prosperous capital market will help to repress the economic bubbles generated by virtual economy as well as contribute to the growth of real economy. This Dissertaion takes initiatives in exploring the interaction between virtual and real economy, the functioning mechanism of capital market, and concludes that a capital market functions as an important channel for the interaction between virtual and real economy.