Study On The Function Orientation Of Capital Market In China

Capital market is a form of directly economic resource allocation. The development of Chinese capital market is achieved by the reform of economic structure and cultivation of market investors; however, there is mutual promotion between them. Institution reform is the underlying reason for the development of capital market, which provides favorable outside environment for institution reform.Capital market plays an important role in national economy due to its special function. However, the function of our capital market is deformed developed with much influence and restrictions, for example, the financing function was excessively strengthened, and the function of resource allocation and risk aversion was severely restrained, which made our capital market not take the full advantage to promote capital accumulation and sustainable economic growth. Therefore, the analysis of the barrier and discussion of the proper mode and measure of our capital market function is of great importance to the healthy development of capital market.This article tries to pierce into traditional way through the qualitative and quantitative method and combination of theoretical and empirical analysis. Through the addition of capital market practice in recent years, the core of this article is the final positioning of capital market function, and concludes the effective methods to fully exert market function.This article elaborates the essence, basic elements and level, and development trend of capital market, and discusses and compares the positioning of capital market function in China and foreign markets, in addition, especially analysis barriers to achieve the functions, finally put forwards some policy-related suggestions. The article includes four parts:Chapter one: Generalizations of Capital Market FunctionThis chapter expounds the essence, basic elements and level, and development trend of capital market by citing the related theoretical literature of famous specialist in China and foreign countries, analysis and sums up related points of capital market function.Capital market possesses complex systems for the different recognition and understanding of scholars in China and other countries, besides the complexity and variation of products and functions of markets. Those above problems concentrate on the definition of capital market. Although the concept of capital market is used in various fields, the particular content is often widely divergent. In essence, capital market covers all the trading activates in median and long terms (more than one year), including stock market, bond market, fund market and long term debt market, in which the financing capital is used to expand the production.Capital market is a vast economic system, in order to fully understand it, it's necessary to clearly define the essence and extension of capital market. By deeply analyzing the functioning frame of capital market, the modern capital market should at least consist of main body, carrier, target, organization frame and rules, etc.Capital market forms the multi-level systems during long-term development, including main board market, second board market and OTC market. Although the characteristics and impact is different for these markets, they constitute a whole, mutually coordinating system.In general, the development of capital market takes on the following trends: first, securitilization of capital market; second, multiplicity of security types; third, internationalization of capital market; forth, liberalization of capital market.Chapter two: Analysis and Comparison of Capital Market Positioning in China and Foreign CountriesThis chapter sums up the shortage of Chinese capital market through comparing the function positioning with developed markets such as the U.S, Japan and Britain. Capital market can guarantee the sustainable and healthy economic growth, and especially promote national innovation and competition, which is verified form the evolution of developed courtiers. Absorbing and drawing lessens form the experiences of developed market positioning has the directing significance to accelerate the construction and improvement of capital market function.Chapter three: The Barrier of Chinese Capital Market FunctionThis chapter shows the current flaw of our market by data analysis and condition summary: first, construction flaw; second, mechanism flaw; third, main body flaw; forth, management flaw.Chapter four: Ideal Mode and Realization Method of Chinese Capital Market FunctionThis chapter discusses the ideal mode of capital market by analyzing its function positioning and influencing factors. The function of capital market needs to change and innovate in order to adapt the economic growth.This chapter consists of three part(main board market, second board market and OTC market) to demonstrate ideal mode for our market:Main board market is security exchange and established in the beginning of 1990s. The main board market in our country gains great development in the past 20 years, and always operates as the most important and core promoting force for the company growth and national economy development.Establishing second board market is the necessary result and objective needs for the national economy growth and social structure reform. Second board market is a supplement of our market, and also provides the platform for many growth SMEs and hi-tech enterprises to raise capital which makes the best combination of the technology and capital. The precondition to establish second board market is to do research about the function of it, and Chinese second board market is very important for the national economy strategy.OTC market is also important in a multi-level market system. Currently, the financing environment for SMEs in our country is not equilibrate to their important role in the economy growth, existing financing means can not fairly meet their needs and the effect way is to promote the OTC market which has been proved by the successful experience in developed countries.The realization of capital market function is the key factor for the role of capital market in the national economic area. As the core of capital market, its function needs to realize based on the institution, however, proper and improved policy is the necessity to further the healthy development of capital market and to realize its function. The policy and measure includes: first, optimization of capital market structure; second, actively development of intuitional investors; third, improvement of the entry and withdraw mechanism; forth, reform of the supervision of capital market.