Empirical Study On The Relationship Between Stock Market Development And Economic Growth In China

As known to all, financial activity plays a pivotal role in the modern economy. There are a few divergent opinions about the relationship between stock market development and economic growth, although most of current economists agree on the proposition that the financial development promotes economic growth. So, the study on the relationship between stock market development and economic growth takes on important theory value and operation significance.The thesis adopts empirical analysis method to study the relationship between stock market development and economic growth, viewed from consumption, investment and money demand etc. Based on this, the author brings forward the relevant strategies to enhance and Perfect stock markets in China recently. Firstly, the thesis introduces the current research on the relation ship between stock market development and economic growth inside and outside in the literature summarization. Then, founded on the neoclassicism macroeconomics and the efficient markets theory, the second part expatiates the theory model and the transmission mechanism of stock markets acting on macro-economy, and discusses theoretically the validity of stock markets. Secondly, the third part utilizes Regression Analysis, Ganger Causality Test and Co-integration Test etc. in the positive study about the relationship between stock market development and economic growth. It turns out that stock markets affect weakly consumption, investment and money demand, and contributes faintness to GDP growth. To sum up,currently, the relationship between stock market development and economic growth is faint. Finally the thesis analyses the political and economic root of the faint correlation between stock market development and economic growth .The author puts forward material policy advices to enhance the efficiency of stock markets, such as emending relevant security statute, perfecting corporate government, accelerating interest rate marketization and the multi-operation tendency in the financial industry, constructing multi-layer stock market system and so on.The innovation in this thesis is lie in the using of empirical analysis and comparative analysis more often. Comparative analysis adopts mostly comparative study on the diversity between the stock markets and economic growth in different country, from which the useful information and experience are extracted.On the other hand, empirical analysis adopts the method of inductive and deductive to research into the relationship between stock market development and economic growth. Combining qualitative analysis with quantitative study, the thesis uses measure analysis techniques (such as regression analysis, co-integration test and Granger causality test etc.) and figure more often, in order to make the outcome possess more persuasion.The shortage in the thesis is lie in two aspects. Firstly, because stock market in China is in an initial stage, so there is less sample quantity in the empirical testing, Secondly, some measure analysis methods are ratherish simple. All these two aspects may influence the veracity of the empirical outcome.