The Empirical Study Of The Relationship Between "Financial Hoarding Hypothesis" And The Stock Price Volatility In China

For a long time,the stock market is a barometer of the macro economy,changes in the stock returns can predict changes in economic productivity.However,after 1990,major countries in the world have "breakup between stock market and economy" phenomenon,gain more and more support of international evidences.The financial hoarding of M·bensiwegen are the invest in financial assets,not play a financing role on the kind of economic activity.In fact,it refers to financial hoarding in the form of the stock or other senior financial assets or a higher yield assets."Financial hoarding hypothesis" is a very insightful new hypothesis.It explain better the breakup between stock market and economy of the United States after 1980s.I borrowe M·bensiweigen's financial hoarding hypothesis to explain the breakup between stock market and economy in China.The difference is that my analysis is based on their own impact of the virtual economic development.Virtual economic development and diversification of financial assets has changed the traditional and single choice of the assets selection and capital allocation,provided more space and more room for choice for financial hoarding.In addition,imperfect financial system,the tommyrot in stock market system and investors adverse selection are serious reasons resulting of financial hoarding and the phenomenon of breakup between stock market and economy in China.If the supply in the stock remain unchanged,the transaction is faster than the growth rate of money supply growth rate of the stock,then,even if corporate profits remain unchanged,would lead to rising stock prices.The economy's excess liquidity usually lead to excess liquidity in the stock market.So,when the government tightens money supply,the stock market will lose money or decline in stock prices.I think that the excess of money supply is the necessary conditions of rising stock asset prices. Since the transmission mechanism of monetary policy still exist some problems,the hidden problem of economic and financial activities has become exposed with the conduction of monetary policy process,and to some extent weakened the role of monetary policy.For example,after the announcement of China's interest rate adjustments,the percentage changes of the stock price in the next day can show that China's stock market is not sensitive to reflect changes in interest rates. Lower interest rates can not play the role of regulation on the stock market.In addition,the monetary value of the independent movement,capital market imperfections and the weaking of enterprise system and social credit constraints block to effectiveness of monetary policy.The way of relying on instruments such as the central bank bills to hedge foreign exchange reserves rise to too many high passive monetary put in practice have also affected the independence of monetary policy.China's stock market performance is obviously irrational exuberance.Turnover, accounts,earnings,exchange rate and other indicators have been very active.In view of this speculative phenomenon,I carry out the analysis from behavioral finance and the inherent vulnerability of the financial system.From the psychological point and behavioral characteristics of investor decision-making,such as heuristic of information processing,regret,Cognitive disharmony,avoid losses,herding,provide a reasonable explanation for China's stock market investors's speculation.Potential financial vulnerability become increasingly prominent,such as unreasonable financing system,inefficient financial system,unsound capital markets,financial vulnerability,as well as moral vulnerability.Vulnerability of many aspects are connected,has impacted on China's stock market price fluctuations.Accompanied by the process of economic development,sustained and rapid economic growth will inevitably bring about the growth of total financial assets.At the same time,the structure of financial assets has changed dramatically.Traditional banking business model have a major change,the financial supermarket features appear gradually.Overall strength of China's insurance industry enhances significantly. Money market,bond market,stock market,gold market and the futures market have been developed rapidly.Residents have also large changes in the investment philosophy.The proportion of stocks,bonds and funds in financial assets rapidly increase.In fact,although many residents have transferred the savings to investment products such as shares,funds,the amount is still small.Most of residents still choose savings.After years of development,China has initially formed a diversified financial market system.However,to some extent the unbalanced financial structure has led to unsound mechanism of the financial system and the existence of the financial system dysfunction.There are considerable gap between our market and developed market economy.For example,China's stock market and bond market development is very uneven, there is a serious "financial lame" phenomenon.The stock market is developing rapidly,while the bond market,especially corporate bond market,the development serious lags.Unsound stock market system cause distortions in the stock market price formation mechanism,the information can not be achieved effectively reflect and transmission,thereby seriously preventing the stock market resource allocation function.I summed up the shortcomings of the listing and from the stock market system,unsound stock market players,bonus issues,the absent of government functions,laws lag,lag of the development of the credit environment,flaws of the transaction system design.The existence of the above-mentioned problem make the capital be eager to enter the stock market,in order to gain additional profits.In the information asymmetry environment,investors may inquire around the so-called "inside information",or listen to the "rumor".This herding behavior even exacerbates the speculation atmosphere and fluctuation degree in China's stock market.With the expansion of China's financial sector,a large number financial hoarding detach the real economy and stay in the area of the virtual economy is the source of power to speed up or down stock prices and break away form real economic development.As gradually broadened investment channels,when the shares of listed companies is not a response to real economic development of China's economy, residents will choose higher-profit investment channels.The resulting diversion of funds is a better explanation for Chinese-style departure between stock market and the Unit.In addition,institutional defect in the financial system itself is also an important reason for speculative options.Speculation behavior and herding caused by imperfect systems,asymmetric information and distorted invest objectives and invest philosophy are one of the reasons for departure between stock market and the Unit. Therefore,I suggest the following methods to change the existing situation,to promote the improvement of China's financial market.Establish a multi-level investment and financing system,expand private investment and financing channels;Improve the capacity of financial innovation,establish a multi-level capital market system,improve the capital market structure,so that the different risk-bearing capacity investors all have the flexibility to change the investment direction,have more investment options;speed up governmen regulatory reform,build the basic system of the stock market,strengthen the rule of law building.