The Influence Of Margin Lending To The Security Market

Margin lending, also known as fictitious transaction, is the infrastructure of a multi-level capital market. Chinese stock market finally launched the pilot margin trading business, after the market's long long waiting. This will save our stock market out of the unilateral condition, and provide a totally new profit model, to those investors, brokers and other participants.As a breakthrough point, this paper studied the influences of short selling mechanism to the market volatility, to the participants and so on. The study is processed in three parts. Firstly, it outlined the characteristics, market effects and different patterns of the margin lending mechanism. By using co-integration test and Granger causality test in econometric method, the paper then empirically proved that short selling itself won't increase market volatility, but lessen it; at least it's the case in Hong Kong security market. The third part mainly analyzed the business risk margin lending will bring to market participants, and made some policy recommendations.