An Empirical Analysis Of The Relationship Between Social Financing And M2 In China

In order to deal with the impact of the international financial crisis, China’s proactive fiscal policy and monetary policy has led to monetary credit growing too fast, the unreasonable financing structure which lead to sustainable money supply has raised concern. Now in China, indirect financing ratio is too high and the proportion of direct financing is low. Since2005, Chinese government has proposed "increasing direct financing scale", and focused on the development of enterprise bond market.This article started from the analysis of changes in the social financing structure, it specifically defined the content and distribution of social financing structure and fully descript outstanding feature of financing structure changes in the past8-9years. Finally the article summarized that changes are referred to direct financing and indirect financing.This article combines the two ways of qualitative analysis and quantitative analysis, and with the method of internal cause and external cause, in addition, use nearly a decade of social financing scale, structure, and M2of monthly data to analyze the total social financing and each part have what kind of impact to M2. From the theory analysis, changes in the financing structure means the change of monetary policy function space and the environment and change of the total M2, By Friedman-Schwartz’s analysis of the determinants of money supply, Total credit markets accounted for reduction of M2is derived, and it prompt the growth of M2, but such proportion of direct financing and bond financing of enterprises expands increases the instability of the total M2. In this article, through the empirical analysis, this problem will be confirmed, and it will be concluded that corporate bond financing growth of M2has certain inhibitory effect. Through that, we can analyze the causes of high amount of M2, and get some Suggestions on financing structure optimization for the society.