Empirical Analysis To The Interrelationship Between Stock Market And Economic Growth In China

The economy of our country has experienced rapid development for about ten years, but the share index was sharply down to the record of six years. The stock market tendency was inconsistent with the economic growth. AK growth model and Schumpeterian growth model has illuminated from the theory that stock market can promote economic growth through four channels. The functions of Stock market can work through them to improve the economy. The conclusions of the intenelationship between them were quite different. It is necessary for us to proof-test it because of the deviation of theory and practice. Firstly the thesis introduce the two growth models, draw the four channels of economic growth. After that it expatiate how the basic function of stock market promote the economic growth through the four channels. Furthermore the interrelationship between them is tested by demonstration, and then reaches the result. The main conclusions of this thesis are as follows:Ⅰ.The development of stock market is probably the cause of economic growth. The economic growth in China is obvious the cause of share index, but lagged one quarter. It means economic growth in China is the cause of development of stock market.Ⅱ.It is not clear that economic growth is the cause of stock market scale, but the latter is the cause of the former. It means the inter-casualty between them is not obvious.Ⅲ. Economic growth is possibly the cause of economic growth, but the opposition is not true.Ⅳ.The correlation between the stock market scale, liquidity and economic growth are as follows: 1.The correlation between the stock market scale and economic growth are slightly negative. It is the same between economic growth and value index. The correlation is not evident for economic growth and economic growth. The effect of stock market scale is larger than liquidity for economic growth. 2. Enlargement of stock market scale not only can not improve economic growth but also block it., but it is not too high for this correlation. 3. It is difficult for stock market liquidity to explain economic growth. 4. The correlation between the stock market turnover index and economic growth is low. 5. The effect for scale variable to economic growth is larger than liquidity ones.Ⅴ.Stock market can improve saving invert into investment. This channel is affected by stock market scale and liquidity at the same time, but it is not fluent.Ⅵ. Stock market can enhance saving rate. The function for stock market to improve economic growth through this channel is limited.Base on the above analysis and empirical study draw the conclusion, the cause of the inconsistence between the stock market and the economic growth in China and the suggestion about eliminating the inconsistence between them to improve economic growth are all present.