| In the latest 30 years, the development of institutional investors significantly influenced developed countries'saving, source allocation, capital market and corporate governance. From developed countries'experience, institutional investors can spur the competition among finance institutions, and improve the efficiency of finance system and capital market.China's capital market still stays in the very early stage. The so-called"emerging and transition"is the current feature of China's capital market, which makes China's market quite different with other countries in many aspects. The history of institutional investors in China is still very short. Although they grow very fast recently, they are not completely mature. We don't know how exactly they affect the market, financial system and economy.In this dissertation, we learn and conclude the theory and practice of overseas institutional investors, conduct macro and micro financial study on China's institutional investors. Finally, combining China's actual condition, we give several suggestions how to develop and regular institutional investors.The first part includes chapter 1, which briefly introduces the definition, origination and categories, and concludes the economy and law features of institutional investors.The second part includes chapter 2, which studies the theory and practices of overseas institutional investors. In this section, we analyze the impacts institutional investors bring to financial structure, efficiency, savings growth and macro economy policies. We also conduct study on the relationship between institutional investors and stock price fluctuation, and how institutional investors affect corporate governance.The third part includes chapter 3, chapter 4, chapter 5 and chapter 6. The study emphasis is China's institutional investors.Chapter 3 analyzes the history, development and regulatory framework of China's institutional investors, using the latest data and diagram.In fourth chapter, we study China's institutional investors from the perspective of macro finance. We think China should continue to develop institutional investors and direct finance. We study institutional investors'impact to China's saving, capital market, banking sector and finance innovation as well. From the example of insurance company, we believe insurance company can link economy and capital market. And then, we study how institutional investors effect China's fiscal and monetary policy.Chapter 5 study China's institutional investors from the perspective of micro finance. Based on the experience of other research, we analyze the relationship between institutional investors'investment behavior and stock price, the effects to corporate governance.Chapter 6 analyzes the challenges China's institutional investors are facing and give the suggestions to develop institutional investors in China.Finally we come up with the research conclusion of this paper.1. Institutional investors can push the progressing the financial structure. Other countries'experience indicated that institutional investors improve the efficiency of capital market, pricing and banking sector and then entire financial system. Institutional investors can help to increase saving, help residents invest on long-term assets, which are good for the investment and economy growth.The second part includes chapter 2, which studies the theory and practices of overseas institutional investors. In this section, we analyze the impacts institutional investors bring to financial structure, efficiency, savings growth and macro economy policies. We also conduct study on the relationship between institutional investors and stock price fluctuation, and how institutional investors affect corporate governance.The third part includes chapter 3, chapter 4, chapter 5 and chapter 6. The study emphasis is China's institutional investors.Chapter 3 analyzes the history, development and regulatory framework of China's institutional investors, using the latest data and diagram.In fourth chapter, we study China's institutional investors from the perspective of macro finance. We think China should continue to develop institutional investors and direct finance. We study institutional investors'impact to China's saving, capital market, banking sector and finance innovation as well. From the example of insurance company, we believe insurance company can link economy and capital market. And then, we study how institutional investors effect China's fiscal and monetary policy.Chapter 5 study China's institutional investors from the perspective of micro finance. Based on the experience of other research, we analyze the relationship between institutional investors'investment behavior and stock price, the effects to corporate governance.Chapter 6 analyzes the challenges China's institutional investors are facing and give the suggestions to develop institutional investors in China.Finally we come up with the research conclusion of this paper.1. Institutional investors can push the progressing the financial structure. Other countries'experience indicated that institutional investors improve the efficiency of capital market, pricing and banking sector and then entire financial system. Institutional investors can help to increase saving, help residents invest on long-term assets, which are good for the investment and economy growth.Currently, companies get money mainly from banks, but institutional investors are becoming stronger. The fact tells us institutional investors could optimize savings structure, lead residents to invest in capital market, where they benefit from economy growth and then protect them from inflation.China's institutional investors enlarge the depth and width of capital market, and lead the long-term and value investment in China. In special stage, like non-tradable reforming from 2005, institutional investors implement their influence and ensure this key reformation successful. Institutional investors bring valuable competition to banking sector, improving its operating efficiency. As well, institutional investors are more innovative now and begin to show its effects to China's macro economy.2. Professional and long-term investment strategy means that institutional investors can stabilize capital market. However, the study and practice can't prove this relationship. From history of US's mutual funds, institutional investors don't naturally stabilize the market, and also it doesn't work in this way from beginning. We think there is long way to go for institutional investors to implement this function. The conditions include the scale of institutional investors. And, whether the individual investors are mature is important as well.Our study finds that China's institutional investors have these valued features, including low turn over rate, low Beta and taste for large stocks. But, from the relationship between mutual fund's behavior and fluctuation of stock price, we can't see the providence that institutional investors can stabilize capital market. We believe that the special stage and institution arrangement the institutional investors to work in right way. We need to find the reasons not only from institutional investors themselves, but also environment, regulation and so on.3. Shareholder Activism changed the corporate governance from"manager orientation"to"shareholder capitalism". We believe that shareholder activism really works and gain positive results.Through the analysis of institutional investment and corporate government results, we find China's institutional investors can help improve corporate governance. However, we also find that the manipulation and incorrect financial information make it hard to use the public accounting information to conduct research. Along with the maturity and further development of institutional investment, especially the growth of long-term investors, like retirement funds and insurance companies, China's institutional investors will put more energy to corporate governance.4. China's regulatory framework is designed based on China's condition. It is a system combined government power and industry self-regulation. The future trends need us to reconsider this regulation system and improve the regulatory efficiency.In conclusion, China's institutional investors are facing many challenges. We should stick to the strategy to develop institutional investors. The major tasks include optimizing market environment and fundamental arrangement, cultivating any kinds of institutional investors, improving internal governance and strengthening industries self-regulation. |
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