Empirical Analysis Of The Short Term Interest Rate Adjustments On The Stock Market Impact

With the continual improvement of China's stock market, the market should reflect the operation status of macro-economy and its correlation with the money market at large. To begin with, this paper reviews the theoretical channel through which the interest rate policies affect the stock market and the possible effect in both long and short term. The paper then tries to analyze the shock of the market before and after every interest rate adjustment to see whether there exists a negative correlation between these two factors. After observing the real short-term time span of interest rate adjustment, the paper chooses range of interest rate adjustment and average stock index before adjustment as two arguments, sets up the regression, and then comes to the conclusion that the interest rate adjustment in our country actually has some effects, but not great, on the stock market in the short run. At the end of this paper, it intends to summarize the reasons.