Capital Market Efficiency And Economic Efficiency

IIn China, not only has the theory of the capital market efficiency been widely discussed in many articles, it has also been applied to the capital market (especially stock markets) to test its efficiency level. Unfortunately, all the discussions are limiting themselves to the capital market itself, without positioning the capital market efficiency theory into the background of the practical operation of the economy or the resource allocation so as to discuss the capital market efficiency from the point of improving the econcrnic efficiency. Through discussing the relationship between the capital market and the whole econctny, the thesis analyzes the role of an efficient capital market in optimizing the resource allocation. The thesis is to demonstrate that an efficient capital market can improve the related asset liquidity and price it properly, and as a result, reduce the expenses related to the reorganization or the reallocation of the asset. Therefore, constructing an efficient capital market is beneficial for optimizing the allocation of the capital asset and improving the efficiency of the econcmy. In short, the thesis basic train of thought can be summarized as: capital market efficiency liquidity to capital assets + proper pricing to capital assets optimizing resource allocation. The thesis is twpart structured: the first part (fxxn chapter 2 to chapter 4) is a theoretical approach whose purpose is to explain the logic relation between capital market efficiency and the econcxnic efficiency. Based on the first part, the second part (chapter 4) is a practical approach whose purpose is, through analyzing the existing China capital market , to find ways to improve its efficiency, and therefore, the econcrnic efficiency. II Main contents and points Chapter 1 is a preface, which specifies the target, purpose and the significance of the thesis: through analyzing the logic relationship between capital market efficiency and economic efficiency to make clear the conditions necessary to develop and perfect China capital market, to improve its efficiency, and therefore the efficiency of resource allocation. The second chapter analyses the capital market efficiency and the conditions required. Capital market efficiency or market efficiency means the efficiency of a securitized capital market in trade regulation and fund allocation. An efficient capital market can price related assets properly and decide their market value so as to guide the proper allocation of fund and the optimal combination of capital assets. The market value (It also called ntrinsic value or eal value in financial theories and security practices) of a specific concrete asset is the discounted value of the future expected income flow of the asset. The future expected income flow is up to many future factors. Due to the fact that future is uncertain and the optimal usage of an asset is multiple, the future expected incc*ne flow of an asset and the standard used to discount the flow must also be uncertain. So, they are quite subjective. Therefore, it is impossible to find any way to measure, count or estimate the arket value of an asset. The market value of a concrete asset can only be decided in the market trading that has reflected the expectations of all the related market participants. Therefore, the security market not only decides the investment value of the related security asset, more significantly, it reflects the arket value of the concete asset represented...