Study On The Liquidity Of China's Corporate Bond Market

Liquidity has always been an important subject of the microstructure theory of the financial market.The developed countries have made deep researches of market liquidity theoretically and empirically in decades. Their academic achievements have been a mature theory system already.Liquidity is vital to the security market and it is also one of the important components of the corporate bond market.The liquidity of the corporate bond market also helps the growth of the whole economy.China's coporate bond market began to develop since 1984.But the process of development seems to be very slow. It suffers a serious liquidity problem and brings negative impact to the whole capital market.Theoretically, the research of the liquidity problem of China's corporate bond market can enrich this academic area. Practically,some momentous steps were taken to accelerate the development of corporate bond markets in many East Asian countries since the financial crisis of 1997.China's academic circle and government have called on the development of corporate bond market for several times. So it is meaningful to do the research of the liquidity problem of China's corporate bond market. Besides,this research could be a good reference to the reform of China's corporate bond market.This article chooses turnover rate as a measure method and proof–tests China's corporate bond market based on a large volume of data. Compared with some international corporate bond markets and China's national debt market, this article gets a conclusion that China's corporate bond market has really suffered a liquidity problem. Then this article makes a comparison of the Shanghai stock exchange,Shenzhen stock exchange and the interbank bond market,getting a conclusion that the liquidity of interbank bond market is the highest,the second one is Shanghai stock exchange, the liquidity of Shenzhen stock exchange is the lowest. Afterthat, this article analyzes the liquidity performances of the primary and secondary markets from several aspects,including the types of corporate bond,the ways of trading,the rate of corporate bond and the composition of investors. Based on these analysis and the new institutional economics theory, the article reaches far beyong those perfermences. I find that all these liquidity problems are caused by institutions. According to the classification of the factors that affecting market liquidity,the last chapter focuses on finding the institutional factors that limit China's corporate bond market.