An Empirical Study On The Impact Of China’s Stock Market Volatility And Liquidity After The Introduction Of Margin

After many years of preparation, China’s stock market eventually came to its own mechanisms for short selling-Margin Trading, Margin takes China into the era of the credit trading in March31,2010, and ends one-side market in China stock market. Introduction of margin trading and securities lending business has changed China’s stock market has long been the "unilateral city" situation, this can be the trading mechanism and short selling is conducive to give full play to the function of the stock market, the market has a price stabilization mechanism, the stock price will not deviate significantly from its value, a certain extent the fluctuation of the stock market, and is conducive to the development of the value investment philosophy will be long-term, stable and healthy development of the stock market has a positive role.Liquidity and volatility are the most important index to measure the quality of security market. High liquidity and low volatility reflect the high market quality, that is the major goal of security market of every country. At present, the financing securities loan service accounts, transactions are increased significantly, thus affect the empirical test of margin trading on the stock market volatility and liquidity is of great realistic significance. Before January31,2010, China also does not exist the financing securities loan service, many scholars is related to Chinese stock market and the relatively high degree of Hong Kong or Taiwan market as research object to study effects of margin trading on the stock market, to determine the impact of margin trading on China stock market. Because the Hong Kong or the Taiwan market and the mainland market has the obvious difference, so the conclusion is deviation. This paper firstly reviews the domestic and foreign research about the short selling mechanism, and then uses the margin financing business generated in China after the data for empirical analysis, analysis of the impact of margin trading on market liquidity and volatility from theoretical and empirical perspective. Finally, according to the research results, combined with the overall environment of Chinese market margin trading, put forward policy recommendations.