The Stock Market Liquidity And Economic Growth

Economists studied the relationship of finance and economic growth long ago. But after 1990s, the study of the theory stepped into a new stage for it's being driven by the New Economic Growth Theory. Especially because international stock markets had developed very fast in the last thirty years, economists paid more and more attention to the important function of stock markets during economic growth, which made it more necessary to study the function of stock markets and its mechanism of influencing economic growth.But stock markets have many aspects of qualities, which include its scale, liquidity, volatility and integrity with international stock markets. Therefore, we must begin with one of its aspects to study the relationship of stock markets and economic growth. The present literatures we have had, however, did not divide it into several small aspects specially, but study them wholly. From the most important aspect of stock markets, liquidity, this article studies the mechanism that the liquidity of stock markets influences economic growth, and empirically analyses the relationship of the liquidity of stock markets and economic growth in China with econometric method. Lastly, on the base of the two former theoretic and empirical analyses, we study the policies that can improve the liquidity of stock markets to accelerate economic growth in China.Chapter One, "Bring forward the question", briefly describes the immense development of the stock markets in the world, especially the outstanding progress of the stock markets in China. And according to this, we put up with the question that stock markets, especially the liquidity of stock markets, are closely related to economic growth, which mainly focus on the effect of the liquidity of stock markets. In the field of researches, the theoretical analyses and empirical study of the relationshipof the liquidity of stock markets and economic growth, which is one of the most important features of stock markets, are belonged to the lasted development of the study of the relationship between finance and economic growth. Chapter Two, "Economic Growth and the Function of the Liquidity of Stock Markets", descripts the meaning, extension and the models of economic growth .At the same time, we illustrate the meaning, measuring of the liquidity of stock markets, and also cite the indicators, which influence the liquidity of stock market. Finally, we briefly describe the function that the liquidity of stock markets affects economic growth. As far as its conception is concerned, economic growth means the GDP, which is computed by constant price. Furthermore, it is mainly long-period economic growth in this article. As far as its internal relationship is concerned, the theory of economic growth saw the development of those models, including Capital Determination, Technical Progress, Human Capital, and New Economic Growth. In the other hand, on the base of the overview of the various related description of the liquidity of stock markets, we illustrate its specific meaning in this article from the micro and macro aspects. Then we put up with the indicators of the liquidity of stock markets from the aspect of breath, depth, edacity, and intensity. In the meantime, we point out the five main indicators that influence the liquidity of stock markets, such as exchange mechanism, the structure of markets, the cost of exchange, transparency, and the behaviors of stock markets. Finally, from the aspect of the social specificity of financial system, we think the function of stock markets include adding saving and improving the allocation of resources, which of the latter includes risk management, the acquisition of information, and corporate governance. Chapter Three, "The Functional Mechanism that Stock Markets Liquidity Influences Economic Growth", after over viewing thepast-related researches, analyzes mechanism that stock markets' liquidity influences economic growth through saving and capital accumulation and resources allocation.In the first mechani...