Research On The Effect Of RMB Internationalization On Stock Price Volatility

With the reform of the international monetary system to become gradually heated,the issue of RMB internationalization is increasingly drawing the attention of scholars at home and abroad. Now RMB has been in the advanced stage of liberalization and the initial stage of monetary regionalization, its impact on China’s capital market will become increasingly apparent. With the backdrop of internationalization of RMB, interest rates, exchange rates and other important financial factors will change,so as the market environment and investor expectations, which means the price volatility of the stock market will inevitably be affected. Normal fluctuations in stock prices can promote the healthy development of securities markets, but unreasonable fluctuations can be prejudice to the stability of the securities market, thus affecting the development of the real economy. Therefore,the study on how the stock price volatility will be affected in the the context of internationalization of RMB has important theoretical and practical significance.This article is divided into five parts, Part1introduces the research background, purpose and significance, so as the article content and ideas; Part2is about the domestic and foreign literature r’eview of RMB internationalization and the volatility of stock price, and introduces some basic theories used in this article;Part3analyzes the linkage mechanism between RMB internationalization and the volatility of stock prices from three different perspectives: international trade, financial factors and psychological expectations;by takeing the United States as example,Part4uses empirical methodology to test the linkage mechanism between the various factors and stock prices with the lasted datas;Part makes the further analysis on the empirical test results,and put forword some suggestions based on the prediction of the stock market price volatility after RMB internationalization.This article uses econometric methods to study the correlation of RMB internationalization and the stock price, examined how interest rates, exchange rates and money supply impact stock prices with the background of dollar internationalization by taking the United States as example,hoping to use more updated data to prove the linkage relationship between them. The current research on the impact between RMB internationalization and the stock market is still stuck on the sentimental and macro level, lacking of in-depth theoretical basis and empirical evidence.This article analyzes the conducted logic between RMB internationalization and the stock price from different perspectives, by theoretical analysis and empirical test, trying to enrich the major topics of RMB internationalization,hoping to provide reference for the reasonable development of RMB internationalization and the stock market.