The Study Of The Relation Between Institutional Investors And Stability Of Securities Market Of China

Institutional investor is important to the development of securities market. From the practice of security market of China, the institutional investor has got very big development in recent years. But there are many defects in construction and developed of institutional investor. The investment idea of institutional investor is immature, which have affected the stock market stability, and market is very difficult to accomplish the effect of optimum distribution of resources. So, analyzing the relation between institutional investor and market stability have practical meaning for us to explore a correct road that the institutional investor develops and work out pertinent policy.This paper introduces the concept of institutional investor and the security market stability and studies some investment behavior characteristics of the institutional investor, as well as action mechanism of the institutional investor's behavior influencing the stock market stability. Through the empirical analysis on investment behaviors of investment fund and its influence to the stock market stability, I find the institutional investor stabilizing the security market in the certain degree. But because of some shortcomings of the circumstance of security market in our country and institutional investor, there is high stock and industry concentration,serious herding behavior and high stock velocity among investment funds. They possibly make negative effect on stability in stock market. The empirical analysis also validates that's security investment funds also don't fulfill the function of stabilizing the stock market. It embodies that stock share holding of funds is positively relevant to fluctuation in index and stock. The increase of stock share holding of funds adds the fluctuation in index, and stock. The cause lies in small volume of security market and singularity of investment varieties, the poor quality of listed company and scarcity in effect supervision, and so on. Finally I bring forward some suggestions to improve the function of institutional investor stabilizing the securities market.