The Impact Of Margin Trading On Stock Market Volatility In China

China’s margin is officially launched on March31,2010, in addition alsoUSES the credit transactions in China’s stock market, the introduction of thesemeans that stock trading system, great changes have taken place in China; Marginof the underlying asset is China on December5,2011to expand its capacity. Themain purpose of this article is to analyze China’s margin trading ShangZhiDou onChinese stock market high and low volatility. Author main selection on November9,2009to2009on April12th, the Shanghai stock composite index, on April2,2011to2011on April12th, amount of margin trading and securities trading, and usingGARCH family models to analyze the introduction of China’s margin and theproperty of oscillation expansion of stock, will China’s margin and the underlyingasset as virtual variables; Then granger causality test method to demonstrate China’sfinancing transaction, securities trading, and the relationship between the stockmarket volatility.Conclusions:(1) margin of reduced the Shanghai stock market volatility;(2)the influence of the expansion of stock market volatility in the underlying asset isnot very obvious. Finally put forward relevant Suggestions, discussing respectivelymargin market supervision and information disclosure of the two policies of theimportance and role in stability of market prices. In short, it can be said that marginis milestone in the development of China’s securities market. But if the margin isnot related to the good policies, the margin will give personal investment and eventhe entire market economy a devastating impact.