An Empirical Study On The Impact Of Interest Rate Changes On Stock Price Of Listed Real Estate Companies

As one of the main means to adjust financial market, interest rate playsa crucial role in both domestic and foreign market. Although in the verybeginning of the development, controls on interest rate level can protectcapital market from some great impact from foreign competitions，it alsobrings a lot of problems. The self-adjusting function of interest rate tomarket is limited, which may lead to limit of the resource arrangement inthe market.Stock market has always been one of the core part of a country’s capitalmarket, and it affects the financial market, even for the whole capitalmarket. Researches of stock market are of more significance, especially inthe country like ours, which is with great population in stock market, poorand late start in development and the whole numbers of economy is great.Although stock market of our country have been developing for over20years, the lack in many aspects of the market is obvious. Therefore, it ismeaningful and worth to research in this field.Most of existing researches in this field so far are about the effect ofmonetary policy on the whole stock market, and the creativity of this paperis we focus on one definite sector, the real estate sector. Furthermore, westudy the influence from a more liberalized interest rate repo and anotherbenchmark rate whose level is controlled by government separately, whichis the main creative point of this paper. In the study, we choose therepurchase rate of inter-bank whose time span is overnight as ourliberalized interest rate, because this rate can reflect well the demand andsupply level to some reasonable extent. The weak point of this paper is wediscuss and research the benchmark loan rate and overnight repurchase’rates influence to the stock price of real estate sector, but we ignore thatof the benchmark borrow rate. In the study of real estate company’s stockprice, the independent variable that we consider is only rate, which means we also ignore other variables like the whole economic environment andthe whole policy tendency of our country. And what’s more, this paper.does not include the research on real field of real estate and housingindustry，which needs to be improved in the future.When this paper start and try to discuss how interest rates influence tostock market, we select the real estate sector in Shanghai Stock Market onone hand and we choose Repo as our liberalized interest rate andBenchmark loan rate level which is limited by government on the otherhand. The time phase is from August2006to September2013, which isrightly after the important reform of tion-tradab!e shares iri Chinese stockmarket. This is a positive milestone of our stock market.Empirical research part in this assay consists of two parts, one is theliberalized interest rate repo and the other is controlled rate benchmarkloan rate. And the result suggests our stock market is of weak-formefficiency and the liberalization of interest rate is positive to thedevelopment of a rational capital market.