The Research Of The Relationship Between Financial Crisis And Herding In Stock Market

The impact of the financial crisis on the country and the world is very large. Studying the reasons of the financial crisis becomes imperative after several major financial crisis. It has also become one of the hotspots of the finance. Herding once has been considered one of the "culprit" to cause the financial market turmoil.It is one of the topics at the forefront of the current financial. The study found that there is close link between the generation of the financial crisis and instability of herding, even instability of herd behavior is one of the main reasons for the outbreak of the financial crisis and the collapse of the securities market. There have been a lot of research at home and abroad.But what is their relationship exactly remains to be further studied. This paper focuses on the relationship between the financial crisis and herding existence and significance of stock market.First of all. this paper introduces the financial crisis and its impact over the years, the concept of herding, domestic and overseas research, research prospects, as well as the impact of herding in the stock market and research significance.Secondly, to study the relationship between the financial crisis and the existence and significance of herding in stock market, we need to study the existence and significance of herding.We do theoretical research of the existence of the herding.Next this paper describes, analyzes and compares some models who research the existence and significance of herding. The model LSV, the model PCM, the model CH, the model CCK, the model based on CAPM. the model RH, the model TAH. And by comparing their advantages and disadvantages. We decide to study the existence and significance of herding in China’s securities market by the measure indicators model based on CAPM and the model RH.Then, we do empirical analysis of the existence and significance of herding in China’s securities market by the measure indicators model based on CAPM and the index model of herding based on information entropy.We research the existence and significance of the herding in two market of Shen Hu in three different historical stages, before the financial crisis of2007-2009, when the financial crisis, after the financial crisis.We do empirical analysis of existence and significance of herding empirical analysis for bull and bear markets in the financial crisis of2007-2009.Finally, concluded that there is herding in China’s stock market, further study found that it is more significant in cattle stock market than in the stock market of the Bear Day in Shenzhen stock market. But Bear market is opposite. Herding is increasing in Shanghai and Shenzhen, and Shanghai stock market relatives faster than Shenzhen stock market. The results show that herding is indeed one of the factors that triggered the financial crisis. The more significant herding is, the greater probability of occurrence of the financial crisis. Based on this conclusion, we make relevant recommendations to the development of China’s securities market, and give the inadequacies of this paper. Pointe out the direction for further research.