Under The Condition Of Open Economy In Our Country Empirical Research Stock Price Transmission Mechanism Of Monetary Policy

The stock price transmission mechanism of monetary policy is a mechanism that the monetary policy tools transmit to real economic area through causing fluctuation of stock asset price which could influence consumption and investment. With a sharp development of domestic stock market, local residents in China are holding much more stock asset in their portfolio while a larger group of enterprises are financing from this market, thus making the stock market and price play a much more important role in monetary policy transmission mechanism, which has caused extensive attention from researchers. However, most local literatures only studied certain segments of the whole mechanism and didn’t consider the different roles of large enterprises and SMEs resulted from discrimination in distribution of bank credit of other financial resource, nor the influence of RMB exchange rate in an open economy condition.This thesis first theoretically analyses the stock price transmission mechanism of monetary policy, from both the mechanism through which monetary policy tools change stock price, and the channel that how these fluctuations of stock price impact on real economic area such as consumption and investment. Then we build an SVAR model containing RMB exchange rate index, as well as the SSE50index and composite index of Shenzhen small plates to represent stock prices of large enterprises and SMEs respectively, in order to make a detailed empirical analysis of stock price transmission mechanism of monetary policy in China.We find that overall monetary policy could transmit to real economic field through affecting stock prices, indicating the stock price transmission mechanism dose exist in our country. Yet different monetary policy tools have different impact on stock price, and the large enterprises and SMEs also show significant differences in the mechanism. Meanwhile, the bank credit concerned channel is weak as result of the rapid development of substitute direct financial market such as stock market. Also with the reform of RMB exchange rate regime and improvement of economic openness, RMB exchange rate is making an increasingly important impact on the mechanism.Our conclusion implies that the central bank should consider the fluctuation of stock asset price when formulating monetary policy, and should set the market interest rate as a suitable intermediate monetary policy target. On the other hand, the authorities should take effective measure to promote bank loans to flow to SMEs, which are lack of other direct financing channel, in order to support their business and ensure the development of the whole economy.