The Study On The Liquidity Of China Inter-bank Bond Market

The inter-bank bond market in China was established in June 1997.After nearly 13 years of development and improvement; it has become a major issue and exchange market place, and has become an important part of the bond market and the dominant force, as government, financial institutions, etc. Also become an important place for the Central Bank of China to carry out monetary policy and macro-control. But overall, China's inter-bank bond market is still in its early stage of development, in the back of some results there are still many shortcomings and deficiencies. One of them is the lack of liquidity, the low overall level. To some extent, this hinders the conduction of monetary policy, affecting the implementation effect of fiscal policy.This paper is divided into five parts. The first part refer to transaction cost theory, liquidity preference theory and liquidity theory of term structure of interest rates and pave the way to do theory. The second part reviews the development of China's history of inter-bank bond market and its current situation analysis. The third part collects data and selects the trade depth of bonds, size of the bonds market, daily average trading volume of bonds, and the proportion of bonds exchange and the hands rate to make empirical analysis. The fourth part is based on empirical analysis before to give a brief assessment of the inter-bank bond market change trend and overall level. The fifth part analyze from the system, market participation, trading way and rate liberalization affect our four inter-bank bond market liquidity factors were discussed.