The Study On The Liquidity Of Our Country's Government Bond Market

Market liquidity is known as the foundation of market efficiency and the lifeblood of financial markets. Bond market liquidity is considered the symbol of the bond market efficiency, and is the important influence factor of bond management and macro-control.Enhance bond market liquidity, it will help to increase the amount of information reflected in bond prices, and will improve the bond market's function of price discovery; will reduce risks in treasury bond management, and raise the efficiency of debt management to reduce the government's financing costs; will provide guidance about pricing for other high-risk financial products so as to help the market improve its risk management techniques; at the same time, high market liquidity plays a decisive part in the effectiveness of the central bank's monetary policy.With the development of China's bond market, it emerges a lot of new situations, such as buyout repurchase has been introduced and Delivery Versus Payment has been achieved, it is necessary to analyze the new circumstances. This paper proposes specific recommendations to enhance the liquidity of the bond market by studying the status of bond market mobility and existing problems.The article discusses the following aspects:The first chapter introduced the purpose of the research article, the studying situation at home and abroad, the significance and methods of this study.Chapter II is the theoretical analysis of bond market liquidity. It introduced the meaning and impact of mobility, and summed up various measuring indicators of the bond market liquidity.Chapter III carries out an analysis of the status quo of China's bond market liquidity. It considers China's bond market liquidity has been improved, as the substantial growth in turnover, improved turnover rate and the narrowing spreads. However, compared to a mature bond market, China's government bond market liquidity is still at a relatively low level. The bid-ask spread is still relatively wide and instable. Spot trades account a very low proportion of transactions, and its turnover rate is much lower than the whole market level. Even the whole market's turnover rate is much lower than that of well-developed bond market. This article also compared the stock exchange market and the inter-bank market. Compared from the trading volume, the exchange market is far less than the inter-bank market, yet compared from the turnover rate, the exchange market is better than the inter-bank market. Compared with well-developed government bond market, China's government debt balance has a larger proportion of long-term bonds, and a smaller proportion of short-term treasury bonds. However, short-term bonds have much better liquidity than others.Chapter IV analyzes influencing factors about the low liquidity of China's bond market. At present, various styles of transaction are missing, the new style of transaction has not been promoted, market maker system is imperfect, bond market is lack of transparency, inter-bank bond market and stock exchange market has not been connected effectively, treasury bond varieties are not rich, the interest rate design are rigid, illiquidity long-term government bonds account too large proportion, types of institutional investors are few, institutional investors' behaviors are homogeneous, China's regulative interest rate policy makes bond yield curve incomplete and the bond market's functions missing.The fifth chapter makes recommendations to improve the mobility of China's government bond market. It suggests several ways to link inter-bank market and stock exchange market better, points out that should develop the over-the-counter market and improve investors' structure and the structure of the varieties of treasury bonds. It also suggests that improve the market maker system, lower the market access standards and strengthen the management of market maker business. Develop bond market brokers and spot transactions, increase the transparency of the market and accelerate market-oriented reform of interest rates are also approaches to improve bond market liquidity.Chapter VI summarized the whole text.