The Research On The Monetary Policy Effect To Stock Market

In monetary policy practice,the main objectives of the domestic and foreign central banks are generally price stability,full employment and economic growth which ignores the conduction and impact on stock market.At the same time,the academic has not yet formed a consensus on the issue about the monetary policy effect on the stock market.The correlations between the money supply and stock index,interest rates and stock index were interpreted differently by economists,which constrained the feasibility and accuracy of controlling the stock market by money supply and interest rate change.On the subject about the money supply impact on stock market,this thesis gets rid of the method by putting the money supply and stock index as the research object directly and introduces the incremental of money supply(AMl),incremental change rate of money supply(D△M1),change rate of Shanghai Composite Index(DS)as the observation target.Measured correlation coefficient for△M1 and S,D△M1 and DS by empirical analyze.The results show that the direction of the incremental changes of money supply and the direction of the index changes are the same overall.There is a very strong positive correlation between the two.On the subject about the interest impact on stock market,cycle concept is introduced, which divides the interest changes into Rate hike cycles and Rate cut cycles in accordance with the time and observes index changes in the corresponding cycle.Analysis results show that the traditional theory of interest rates and the stock market which said that there was a negative correlation between the two was not apparent in our country.The change of stock price index is not sensitive to the changes of interest rate.The mechanism of adjusting the level of interest rates to influence the stock price index has not yet formed in our country.It implies that our central bank Can not afford to regulate the stock market by adjusting the level of interest rates.According to the analysis conclusion,we give five policy proposals:Monetary policy formulating should pay more attention on the stock market;Take the increment of M1 as basis to regulate or forecast the stock market;Speed the interest rate liberalization advancement up;Strongthen the interaction between money market and capital market;Raise monetary policy conduction efficiency on stock market.