An Investigation On Stock Market Liberalization:Based On The Comparison Of Taiwan Market

In recent years, China’s backward capital market can’t marry advanced real economy any more. China can not distribute left capital to world or draw capital inside. This problem promotes speed of China’s capital market liberalizing. China needs to find a country or region whose market liberalizing is early to compare with and formulate stock market liberalizing policy strategy for next step.This paper structure welfare function to analyze liberalizing degree of welfare maxima. The conclusion is the degree is proportionate to the host country stock market competition and capital gap. It defines welfare using stock market value、 earning ratios、investor’s structure, etc.This paper defines economic welfare effect and uses it to compare China’s stock market liberalizing policy strategy with Taiwan’s. Taiwan area is gradually liberalizing its stock market. Taiwan’s policy affords us lessons on China’s stock market liberalizing. On the basis of summing up and comparing the stock market liberalizing experiences of other emerging economies which have liberalized their stock markets, we can find liberalization is good for promotion of welfare effect. Taiwan area has finish financial liberalization and its market comes mature to keep high level foreign capital. China’s stock market remains a lot of problems. Financial liberalization will synchronize with stock market opening and it’s not time to fully open stock market.At the end of this paper, it insists that the further liberalizing reforms should be prudently positive and the open policies should coordinate with the development of supervision system. Moreover, we should not only pay attention to coordinating stock market liberalization with the ongoing financial liberalization, trade liberalization and other market-oriented reforms, but also choosing the appropriate time to open China’s stock market. Deepen stock market and open up market volume, realized China’s stock market fully liberalizing step by step.