A Research On The Movement Characteristics And Development Patterns Of China's Paper Market

This paper proposes a pro-cyclical effect model on paper market theoretically. In this model, there are such two stages as stable development and radical development during the movement of pro-cyclical effect. And the derivation of the model shows the boundary point between the two stages.Through the data analysis empirically, China's paper market in the past decade has developed too fast and entered the radical development stage. The reason for the abnormal volatility of paper market is the fast-growing economy. The empirical study on the sources of the pro-cyclical effect shows that apart from the fast-growing economy, the development of financial paper and the paper trend of credit assets are also the main reasons.On the basis of the empirical study, a further analysis demonstrates that the abnormal volatility of paper market leads to the risks of the economic bubble, lack of corporate liquidity and over competition of financial institutions and out of control of money supply, etc. The fundamental sources of the pro-cyclical effect and the abnormal volatility of paper market are lie in the positioning error of paper market, lack of categories of paper, lack of flexibility and absence of professional supervision, etc.In view of these shortcomings of paper market, the operation patterns of China's paper market close to Japan and Taiwan model should be chosen and a high standard of market access for the Franchisees should be prescribed. The innovations should focus on the financial paper and medium term paper. Financial infrastructure construction should focus on the amendment of the paper law, cultivation of the participator of paper market and the improvement of the credit environment. The patterns of supervision should study from the United Kingdom and Japan, allowing the functions of both the government guidance and the market action.