Reaserch On The Factors Which Affect The Commercial Paper’s Liquidity

Commercial paper was developed in the background that China’s bond marketlack of short term credit products, direct financing&indirect financing imbalance,and enterprises lacking direct financing channels, Commercial paper is an unsecuredcredit tool which exist only in China. In the past few years, Commercial paper wasdeveloped very fast, on the first half of2011,there’re286companies issued306Commercial paper, total amount378.44billion. So far, Commercial paper has becamethe4thcredit instrument which just behind government debt, central bank bills andfinancial bond.By far there’re lots of researches on Commercial paper, but they all focus on thedevelopment, pricing method or different types of risk, and lack of empirical analyses.Thus, we study the main factors which are most likely to affect the liquidity ofCommercial paper, besides, we use empirical analyses in our studies.At the beginning of the article, we review all the researches of Commercial paper,then we review the theories about liquidity influence factors, next we state the presentsituation about Commercial paper, then uses empirical analyses to find out the mostimportant influence factors, and use turnover rate as liquidity index, thoughregression analysis to measure the degree of correlation. At last, we raise someadvises on how to improve liquidity of the Commercial paper.The empirical result shows that the macroeconomic factors, issued subjectfactors and the currency adjustment factor are the main factors which affectCommercial paper’s liquidity. These factors all affected liquidity in an indirect way.Based on the empirical results and reality, we make some suggestions aboutimproving the liquidity of Commercial paper, such as providing policy support, widenthe market participants and developing derivatives.