Relevance Research Between The Open-ended Fund Flow And The Stock Return Volatility

The Open-ended Fund Market will increasely effect the Stock Market while the liquidity of the investors'capital can be ensured, especially the individual investors', because of the Redeemed System. Every country wants to establish and develop the Open-ended Fund Market for promoting the Stock Market, using the foreign experience. This paper studies the relationship between the Open-ended Fund Market and the Stock Market for evaluating correctly Mutual Fund and helping to relieve the volatility of the Stock Market. Therefore, we can guide kinds of investors to make right decision, and protect the advantages of investors. It is importance for developing and stabilizing Financial Market. The structure of this paper is as follows:In Section 1, we introduce the selection background and meaning of our study, and outline some previous studies.In Section 2, we describe the mean of the Open-ended Fund Flow, and analyze theoretically the interrelationship during the Open-ended Fund Flow, the Stock Market and the Price of Single Stock. Then, we study how to develop the Open-ended Fund Market to make our Stock Market better.In Section 3, we provide evidence for the relationship between the Open-ended Fund Flow and the price and volatility of the Single Stock. The result suggests that the Fund Flow negatively effect the return of Stocks. a positive correlation has been found between the Fund Flow and the volatility of the Single Stock in short-term, however, a negative correlation has been found between them in long-term.In Section 4, we provide evidence for the relationship between the Open-ended Fund Flow and the Stock Market with statistical methods such as Granger examines, VAR model, variance decomposition and so on. The result indicates that the return of Stock Market has a important positive effect to the Fund Flow, the volatility of Stock Market has a important negatively effect to it.In the last part, it is a summary of our study, and we give some realistic explains. Finally we put forward some proposals.