An Empirical Study Of The Relationship Between Chinese Stock Market And Economic Growth

Financial activity plays an important role in the running of a modern national economy. Western economists have long already begun to study the relationship between financial development and economic growth.The relationship between stock market which plays an important part of the financial market and economic growth has been more and more concerned by economists. Economists have conducted a lot of research in the relationship between stock market development and economic growth, but so far, there have been still a lot of controversy in it.After20years of development,with the establishment of Shanghai Stock Exchange and Shenzhen Stock Exchange in the early1990s, Chinese stock market has reached a certain scale. At the same time, China’s economy has also made a huge development. But in China, the relationship between stock market development and economic growth is not obvious, which is mainly because there are still a lot of problems and defects in China’s stock market, and stock market development and economic growth to a certain degree of departure from the stock market in China does not play the role of economic "barometer".As a result, the relationship between the development of the stock market and economic growth, the affect of the economic growth and the way that stock market effects the economic growth is significant to the development of China’s stock market and economic growth.Firstly, this paper describes the development of China’s stock market, including the phasing of the stock market, the development status and characteristics of the stock market as well as its reasons. Secondly, the paper analyses the impact of the stock market on economic growth from the three aspects of the theoretical model, the mechanism of action and the conduction channels.Pagano endogenous growth model and Schumpeterian the genre growth model, the stock market affect the economy by affecting the proportion of savings into investment, the capital marginal social productivity as well as private savings rate three ratios and technological innovation theory reveals growth rate. Modern economic theory suggests that the stock market through the mobilization of savings, risk diversification, the information reveals five aspects of corporate governance and provide liquidity to promote economic growth. The wealth effect channel, channels of investment effect, balance sheet effects channels and a liquidity effect in the stock market affect economic growth conduction channels channels. Finally, and from theoretically analyzed the impact of economic growth on the stock market.The empirical part of this paper were selected indicators reflect the size of the stock market capitalization rate and liquidity indicators reflect the stock market turnover rate stable VAR model to reflect the economic growth indicators GDP, These variables cointegration test, Granger causality test and impulse response analysis, focusing on the development of the stock market’s impact on economic growth. Through cointegration test and error correction model, we can know that a certain role in promoting economic growth in the short term, the expansion of the scale of the stock market, stock market liquidity enhancements will inhibit the growth of the economy, but the impact is extremely limited. In the long-term expansion of the scale of the stock market but will hinder economic growth will hinder economic growth, stock market liquidity enhancements, but the effect is weak. On this basis, the variable Granger causality test and impulse response analysis concluded that there is unidirectional Granger causality between the size and economic growth of the stock market, and the liquidity of the stock market and economy Granger causality between the growth in both the size of the stock market in the short term or the liquidity of the stock market are extremely limited impact on economic growth. In general, the development of China’s stock market, both in the short or the long term, economic growth, no significant impact on economic growth, the development of China’s stock market showed a weak correlation. Followed by the empirical results, that China’s stock market and economic growth is weakly related reasons are:Scale of China’s stock market is relatively small;"policy market" characteristics of China’s stock market is obvious; overall poor quality of listed companies; investors in the complex structure, the lack of long-term investment capital; Chinese stock market system defects; regulatory mechanism is not perfect.In the last,we put foward the corresponding policy and recommendation according to the conclusion.