The Affect Of Monetary Policy To The Market Price Of A-Share

With the development of China’s stock market, it is increasingly important of the impact to people’s live, many historical events also confirmed the interaction of monetary policy and stock market. Therefore, the study of monetary policy on stock prices has important practical and theoretical significance.This paper is to study monetary policy in China A-share market price, and research methods of theoretical analysis, supplemented by empirical analysis of the main. On the choice of variables, money supply, interest rates and the Shanghai A-share composite index as the main object of study, supplemented by the rate of inflation, industrial output value as the control variable, in the empirical part,we use unit root test, cointegration tests, vector auto regression models and the impulse response function to analyze the impact of monetary policy on stock price, In the study of the impact of money supply to the stock prices, we respectively use the MO, Ml, M2with control variables modeling VAR model, and then respectively analyzes the impact of the three levels of money supply on stock prices; In the study of the impact of interest rates on stock prices, we weighted average interest rate of7days as the variable representing the interest rate, and put it with stock price index, industrial output value, the rate of inflation modeling VAR model analysis of the interest rate on the stock price, and then through the measurement tools to analyze the impact of interest rates on stock prices.This paper can be divided into three parts in structure:The first part is the Introduction and theoretical part, including the first to the third chapter, where the first introductory paragraph introduces the research background and significance of the topic of this article, the chapter2introduces the determinants of the stock price and the stock price index, and the third chapter is devoted to the theory of stock markets to transmit monetary policy.The second part the empirical section, which includes chapters four and five, The fourth chapter study the impact of money supply on stock prices, and the fifth chapter study the impact of interest rates on stock prices.The third part is a summary of this article, it includes the sixth chapter, the chapter give a conclusion of the paper and the policy recommendations based on conclusions, pointed out the inadequacies of this study.On the basis of the theoretical and empirical research, we reached the following conclusions:1, In the three levels of money supply, MO and M2has no effect on stock prices; Ml statistically significant impact on stock prices, the direction of influence is a negative direction, the influence reached maximum needs one year, then to the impact disappear needs two years. Therefore, by changing the money supply corresponds to a sudden short-term stock market volatility is null and void;2, The interest rate impact on stock prices is also a negative direction, its impact on stock prices is progressive, that is, first increases and then decreases, and the influence reached maximum needs one year, then to the impact disappear needs two years.. Therefore, in the face of sudden short-term stock market volatility, the central bank chooses the interest rate as intermediate target of monetary policy is also not feasible3,From the impulse response function, it can be seen that the interest rate effect on the stock price is greater than the impact of money supply (M1) on the stock price, but whether it is the interest rate or money supply, the absolute value of the stock price is not particularly the monetary authorities should choose a more effective monetary policy variables as a measure of monetary policy intermediate target.4, It should be further speed up the process of the marketization of interest rates, because of interest rates is not yet fully market-oriented structure of interest rate risk. Only after the interest rate market, the central bank’s monetary policy will be full impact of the relative rate of return in the stock and other financial assets, prompting the public to convert funds between stocks and other financial assets, make the interest rates on stock prices deeper and faster.5, By observing the two control variables, we can see the inflation significantly affect the stock prices,and the direction is negative, the total industrial output value did not affect the stock price, so the central bank can choose the rate of inflation as a monetary policy intermediate variables.