Liquidity And Capital Market Stability Studies

We recognize that excess liquidity and the liquidity crunch can be quickly reversed through the financial crisis, transmitted in financial institutions and financial markets, impact the capital markets and the real economy, causing instability in the financial system. Judging from China's actual economic situation, the stability of capital markets related to the security of the entire financial system, the economic development of society also has a tremendous impact. Therefore, discussing the relationships of liquidity and capital market' stability on the background that there is excess liquidity in the economy has a realistic significance to the sustainable economic development.The essay adopt empirical study and theory study methods on the basis of literature review on liquidity study.It has depth discussion and study on the status of liquidity problems, relationships and impacts between liquidity and capital market stability, and the countermeasures through the use of induction and deduction, qualitative and quantitative analysis of vertical and horizontal comparison method. The essay gets the main conclusions, M1 is the inportant indicator in studying stock market volatility, the reason for the changes of the stock indexs, and it has important significance in studying the trend of the stock market. Currency liquidity indicators also reflect the situation of the liquidity in the economy, this conclusion echoes the theme of this essay that the changes of liquidity will affect the stability of capital market.