The Causes Of Excess Liquidity And The Impact On The Stock Market In China

The discussion about excess liquidity began in commercial bank sector, investment yield declined because of the rapid expansion of financial assets. When we think about how to solve the excess liquidity of commercial banks, stock market supplied opportunity. After the improvement of equity owner ship, stock market came into an unprecedented bull market, because of the capital of profit-driven nature, the excess liquidity came into the stock market, promoted the A-share index raise five times in two years. Based on the stock market as the breakthrough point, By studying the performance of the stock market under the pressure of excess liquidity, we hope find the answer of how to solve the excess liquidity .The thesis consist of 5 chapters:Chapter One: Introduce proposing of excess liquidity , and the study status at home and abroad .Chapter Two: Analysis of the reasons of excess liquidity, including three parts of content, firstly definition of excess liquidity and secondly the various manifestations of excess liquidity, thirdly analysis of the causes of excess liquidity.Chapter three: How the excess liquidity impacted on the stock market. Before the second half of 2005, excess liquidity existed, however, the stock market wasn抰overheating until occurring of various positive factors. This chapter describes how the excess liquidity promote the stock market.Chapter four: If no effective controlling, the excess liquidity would cause the stock market bubble. Recalling Japanese bubble economy, and comparing of the difference between China and Japan, we can get some lessons from the experience of Japan, and find solution of excess liquidity.Chapter five: the methods of excess liquidity. Firstly, we should block the source of excess liquidity: expanding domestic market, strengthen and improving foreign exchange management system, opening up the capital account gradually; Secondly, we should guide the flow of liquidity: increasing the supplication of stock market, improving the stock system, and so on.