The Research Of The Behavioral Character Of Chinese Security Market Based On Behavioral Finance

Behavioral finance make up limitation of the traditional financial theories, and it caninterpret abnormal phenomenon which classic finance failed to provide explanation. Ithas showed its mightiness vitality. But behavioral finance has many limitations in theoryand model construction, and it still needs further improvement.This thesis introduces the theory of behavioral finance in detail, analyzes thesecurity market's characters. And further, this thesis discusses the function mechanism,gets knowledge about special market in our country, trying to bring forth my ownopinions on the reform of investment and security market.First the thesis reviews the origin and developing history of behavioral financetheory;introduces its theory foundation and models in detail and points out thatbehavioral finance theory has accelerated the development of the financial theory in threeaspects: function, theory and technique.Secondly, through empirical analysis a conclusion is drawn that there are noisetrades in China security. The thesis analyses the reason why this exists and put forwardsome suggestion on the development and reform of the security market in China.Then the herding effect and related theories home and abroad, is introduced. CSADis used to test whether the herding effect exists in China's security market. The empiricalanalysis, taking all the data of all the stocks in Shenzhen and Shanghai Exchange intoconsideration, shows that the herding effect does exist in both exchanges no matter thestocks' prices rise or fall.Then data shows that the close funds in China, as well as in abroad, have discountedphenomena. The traditional theories about this are introduced briefly and the limitationsalso showed. Then the enigma of discount is unpuzzled well by behavioral finance. Atlast the reason of discount is analyzed.At last, the investment strategy based on behavioral finance for reference is showed,facing to the special background. And a fine prospect of behavior finance was assumed,especially in Chinese security market, according to the limitation of behavioral finance.