An Empirical Study On The Impact Of Monetary Policy On China’s Stock Index

Monetary policy plays an important role in the government as an important means of regulating economy. However, due to the way of monetary policy on economic impact is indirect, in order to accurately use monetary policy, we must better understand the transmission mechanism of monetary policy. Which asset market, especially the stock market as one of the important ways of monetary policy, it is worth our focus to study.This paper first analyzes the immediate impact of monetary policy instruments on the stock index, because the tools of monetary policy, the impact of the deposit reserve ratio on the market the largest amount of money in circulation, this analysis focuses on the influence of the deposit reserve rate changes on China’s stock index, this paper uses the method of event study, the deposit reserve rate is not impact on the stock index, the economic theory is not only the expected monetary policy will affect the stock index, so the deposit reserve rate has no effect on the stock index may be one of the reasons is the monetary policy tool has been expected, there may be leaks or regulatory policy is not perfect in the small number of people in advance for policy dividend, the stock market caused by asymmetric information into a small number of people can be informed insider information to profit by places. To minimize the losses caused by asymmetric information to investors in government departments.To study the effects of long-term goal of monetary policy on stock index, because the current conduction mechanism of monetary policy on the stock market is not very perfect, and if a simple time series of multiple linear regression, in control in addition to the choice of monetary policy target of the rest of the variables very easy to appear strong multicollinearity, resulting in the parameters is not significant, and effects of monetary policy target of stock index may can not be used to describe simple linear, and key assumptions of multivariate linear regression is sound of the objectives of monetary policy on the stock index in the number or the growth of the growth rate is unchanged. This paper uses VAR model, its main advantage lies in the influence of dynamic analysis of monetary policy on the stock index can, of course, the effect of monetary policy on the stock index is in the economic system, the gross national product, the money supply, price index, and the stock index constitute a VAR system, analyzes the influence of monetary policy on the stock index, the impulse response function to study the goal of monetary policy in the VAR system of stock index influence. Concludes that the effect of monetary policy on the stock index in the medium and long term in sufficient.