An Empirical Study Of Relationship Between The Development Of Stock Market And The Growth Of Economics

Financial market plays a significant role during the past30years when economic reform and opening were implemented in China. However, there are capital and labor surplus behind the economic miracle as a developing country which involve in financial development. Bank industries have achieved better governance structure after several reforms. However, because of the establishment of the stock market is late, relative to the sustained and rapid development of the real economy, the stock market often has large fluctuations, which is seriously out of line with the real economy. The stock market as the main body of the financial markets in the future, how it affects the economic growth is still an urgent need in-depth analysis and discussion.Firstly, the introduction raised the issues. Then summarize the status of related researches from the point of view of theoretical and empirical. The different scholars’researches show theoretical as well as empirical research on the relationship between the stock market and economic growth, there is a lot of controversy.Secondly, the paper describes the basic functions of the stock market, due to the general applicability of the stock market, stock market’s basic functions grouped into five aspects,1.provide liquidity;2.risk diversification;3.access to company information;4.to improve the control of the company;5.mobilize social savings. Then this paper from the angle of the path analysis to explore the stock market is likely to promote economic growth three paths:1. change the ratio co of savings into investment;2. improve the capital production efficiency A;3. to change the private savings rate S; from conduction the point of view of the mechanism, and discusses the stock market is likely to affect the economic growth of the three channels:1. the wealth effect channel;2. investment effect channels;3, the balance sheet channel and liquidity channels.Again from an empirical point of view began to explore the relationship between the development of China’s stock market and economic growth. The paper first clarifies the connotation of economic growth and stock market development embodies three indicators:the capitalization rate, liquidity and volatility. Select the quarterly data of2000-2011, China’s real GDP, the capitalization rate, volatility and liquidity of the four indicators, real GDP as the dependent variable, to capitalization rate volatility and liquidity as the independent variable, multivariate VAR model; the use of the Johansen cointegration test; Granger causality test and pulse response analysis and other quantitative analysis methods to examine the impact and mechanisms of action of the stock market development and economic growth, from the short-term, long-term, as well as causal relations. Johansen cointegration test found that the development of the stock market in the long term to promote stable economic growth, and is significant. Granger causality test:Indicates that the indicators of the size of the stock market capitalization rate and real GDP unidirectional causality exists, indicators of volatility and liquidity indicators exist bidirectional causal relationship between indicators of volatility and liquidity indicators with real GDP, real GDP Granger cause real GDP does not Granger cause volatility indicators and liquidity indicators. Impulse response analysis results show that:the economic growth of the size of the stock market most significantly, the size of the stock market, stock market volatility and stock market liquidity sex to GDP is also more significant with, while the stock market liquidity and stock market volatility indicators to GDP than small.Finally, conduct a preliminary analysis that the indicators of the liquidity and volatility of the stock market and economic growth relationship empirical results. This may be the role of the stock market in the supervision of listed companies and to provide useful information is limited, the efficiency of resource allocation needs to be improved. The reason is summarized as follows:first, the quality of listed companies is not high; the second stock market, excessive speculation exists; the third, the distinction of tradable shares and non-tradable shares. fourth, excessive government intervention to affect the stock market stability. From the above analysis, we can see that China’s stock market in general and China’s economic growth is still positive relationship, but the stock market play based chips finance function, this paper from the following four aspects of policy recommendations:1, transition positioning of China’s stock market; expand the market scale;3, to strengthen the regulation to curb speculation; guard against financial crisis. Although government financial support policies implemented by the stock market and achieved remarkable results, we still have to actively explore the role in promoting development model to improve the stock market and to promote the development of the stock market to standardization, market-oriented, international direction. Stock market development model to achieve from the government-controlled to a market-oriented type of evolution; functional positioning to achieve integrated evolution from a fund-raising type to function; services to the national economy to achieve from the service of the state-owned enterprises on the market target type of evolution. I believe that the standardization and internationalization of China’s stock market is gradually maturing of greater extent will promote China’s economic growth.