| The stock market of China fluctuates fiercely since its establishment in1990and most of us believe that the irrational investment decision and speculation behavior of individual investors causes this situation. So in recent years, our government encouraged and gave great support on the development of institutional investors for the purpose of stabilizing stock market. So since1998, the security investment funds have developed greatly and the influence imposing on the stock market becomes increasingly obvious. However, as institutional investors developed fast, whetherinstitutional investors perform the function of stabilizing security market is controversial. So understanding the interaction between the institutional investors and the stock market therefore promoting the development of both, has important theory research and application value.Applying finance, quantity economics and statistics theories and methods and using the latest data, this essay is focused on the interaction between the institutional investors and the volatility of stock market to study whether institutional investors stabilize stock market. Efforts are also made to grasp the underlying reason behind the current conditions, which can be hopefully used as a reference when follow-up policies are developed.On the basis of a retrospective summary of the studies in this field that have beenconducted in recent years, this essay makes empirical study on the interaction ofinstitutional investors and the volatility of the whole A share market securities by using the statistical model—self regression and cross-sectional data. The empirical study shows that institutional investorsprefer stocks with lower volatility but destabilize stock price volatility. After years of development, although the institutional investors become more effective and standard, they haven’t perform the effect of stabilizing stock market. At last, according to the previous analysis, this essay puts forward the relatedcountermeasures suggestions. |
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