Empirical Study Of Monetary Policy On Chinese Stock Market

With the rapid development of Chinese stock market has become an important channel forfinancing. More and more people are involved in stock market and relation between the stockprices and real economic activity become closer. Center Bank of China frequently use monetarypolicy to adjust the benchmark deposit and lending interest rates and interest reserved ratio，andadjust money supply. Although each monetary policy is not adjusted for the stock market, it willhave great impact on the development of the emerging Chinese stock market Center Bank ofChina frequently use monetary policy to regulate and control4trillion investment since2008which lead to inflation in2010-2011, while the Chinese capital market (stock market) continuousshock. What the central bank’s monetary policy adjustment impact on the stock market？Contraction and expansion effects are symmetrical? This article mainly says the research ofmonetary policy adjustment on the stock market from2006to2011，the main indexes are themonetary supply, interest rate policy, the deposit reserve ratio and the Shanghai and Shenzhen300index. First, the paper examines relationship among the interest rate policy, the depositreserve ratio and the money supply, obtain results of the interest rate policy, the deposit reserveratio adjustment will have some impact on money supply. It mainly uses the T-GARCH model totest the asymmetry of the monetary policy. Examine Chinese monetary policy has a spillovereffect on the stock market。Among them, the money supply and the reserve ratio for the stockmarket has a positive spillover effect, and the reserve rate positive spillover effect; interest ratehas negative spillover effect on the stock market. In addition，Which monetary policy play a rolein Chinese stock market volatility has leverage effect.