A Positive Analysis Of The Impact Of Money Supply On China Stock Market

In the history of China stock, the Chinese government has always been playing a role as a nursery and protective umbrella in the process of the stock market growing healthily. Against the complex economic backdrop of the growth of China stock market, the effectiveness of monetary policy was subjected to a tough test. Our government seemed to be somewhat overwhelmed in front of such a volatile and frequent-changing situation, particularly in the current global financial crisis. In order to keep the securities market, especially keep the stock market developing healthily, the Chinese government has always been committing itself to create a stable monetary and financial environment.In order to keep the health of the monetary and financial market and strengthen the risk-resisting ability against the financial crisis, Chinese academic community has always been trying to search for some moderate monetary policies which were stable and could be controlled effectively. In view of the current monetary policies may be short of effectiveness and the environment of the securities market is changing all the time, so it is meaningful and significant to have a research which is timetabled and helpful in such a changing time. Therefore, the latest data and widely used econometric model are used in this thesis, and we will study the relationship between stock market index and money supply. The thesis will be useful in both macro and micro perspective, and it will also be remarkable significance in theoretical and practical application. That is the value the research searching for.In this thesis, money supply and Shanghai and Shenzhen stock price index are used as representative variables of the monetary and financial system, financial measures such as ADF unit root test, Johansen cointegration test, vector autoregressive (VAR) and Vector Error Correction Model (VECM) are applied to study the interrelationship between money supply and stock price index, the measurability and testability of all levels of money supply which can be regard as controllable intermediary instruments of monetary policy are analyzed to get the integrated effects of impact. The research combines theory with practice in this thesis to study the relevant theoretical system, interaction in short and long-term, causality and mutual influence ability. The results of positive analysis and the economic significance are summarized in the last part, then the trend of future policy as well as the possible impact on the stock market and specific proposals are put forward...