The Study On Liquidity Of China's Treasury Bond Market

The experience of developed countries improves that Treasury Bond Market is an important part of the financial system. And whether or not Treasury Bond Market can function smoothly depends on the liquidity of this kind of market. Basically, all activities of security market surround the liquidity: dealers provide the market with liquidity; commission merchants and transaction exchange organize liquidity for the market; impatient investors gain this liquidity. So liquidity is the life of the market. Without liquidity would the market lose the meaning of being.Since the reform of China's Treasury Bond Markets system from 1981, it has made great progress. However, we still cannot deny the fact that there still exist some problems, a significant one of which is the weakness of liquidity. So it is necessary to study China's Treasury Bond Market liquidity and search measures according to problems existing of liquidity, in order to reinforce liquidity, promote market efficiency and pull economy growth.The first purpose of this essay is to design suitable liquidity measures, which will facilitate the theoretical study and operation when measuring the liquidity of China's Treasury Bond Market. So Chapter Three takes advantage of width measure, depth measure, and both with empirical data in order to describe the liquidity of Treasury Bond Market more clearly. The second part is to deeply analyze the factors which influence liquidity of China's Treasury Bond Market, and provide powerful proofs for studying the causes of the change of liquidity. Chapter Four focuses on four aspects: market microstructure, product patterns and participant structure. Market microstructure includes market structure and the market-maker system. Finally, in terms of the existence of problems mentioned, the paper gives some effective methods for sustaining and improving liquidity.