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An Empirical Study And Mechanis Analysis On The Relationship Between Stock Market And Economic Growth In China

Posted on:2003-10-22Degree:MasterType:Thesis
Country:ChinaCandidate:M ChenFull Text:PDF
GTID:2156360092965761Subject:Technical Economics and Management Studies
Abstract/Summary:PDF Full Text Request
Firstly this paper introduces the recent theoretical and empirical studies on the relationship between stock market and economic growth. After summarizing the basic functions of stock market- facilitating risk management, improving information acquisition, monitoring managers and exerting corporate control and mobilizing savings, this paper outlines the channels through which stock market and economy affect each other.Then this paper analyses the possible impacts of China stock market on economic growth, including raising the social marginal productivity of capital, the amount of saving funnelled to investment and speeding the reform process of the state-owned enterprises.Empirically, this paper invests the interaction between Stock Market and economic growth in China by using regression analysis, Bivariate Granger Causal Relation Test and impulse response analysis. I find that the Chinese stock market size was significantly and positively correlated with economic growth and saving deposits rate, even after controlling for other growth inducing variables. On the basis of this, the dynamic interaction relationship between stock market development and economic growth of china is examined in a bivariate vector autoregression (VAR) framework. I find there is one positive cointegration between stock market capitalization and economic growth, uni-directional causality from GDP to the stock market capitalization, but the stock market shock can influence the output positively. Contrast to the stock market capitalization, the stock market liquidity has weak linkage with economic growth.
Keywords/Search Tags:Stock Market, Economic Growth, Causality Relationship, Impulse Response
PDF Full Text Request
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