The Research On China’s Art Market Bubble

In recent years, with the gradual formation and promotion of art investment ideas,China’s art market has entered a new stage of development. Financial trend of marketis growing, art fund, art trust, art-share and art insurance etc have been launched intomarket successively, high level of investors’enthusiasm not only led a new round ofhot situation in the art market to generate, but also caused some question about theexistence of bubble in the art market.Based on the traditional asset bubble theory, this article dissects the concept andmeaning of art market bubble detailedly, also defining the essential characteristics ofit.Then the thesis expounds the specific generation mechanism of art bubble,considering investors’psychological factors and the essential attribute of art. On thisbasis, the paper gives a practical analysis of the early1990s, Japan’s famous artmarket bubble case,followed by a summary about the development process of China’sart market.It mainly discusses the current situation of the art market from four mainaspects: its transaction size, structure, financial trend and future developmentdirection.Subsequently, through the method of dynamic auto-regression andco-integration equation, the article tests the existence of bubble in the art-sharemarket and art auction market respectively, making Granger causality test and impulseanalysis based on a VAR equation between the bubble sequence and current indexprices, money supply, the number of auction items as well as the turnover rate.Finally,based on empirical results and formation mechanism analysis in the theoreticalsection,the article put forward policy recommendations for the development ofChina’s art market.This article aims to analyze the formation mechanism of art market bubble andexplore the deep-seated causes of it relying on the feature of art which is unliketraditional investment methods. Moreover,through the empirical test about the size ofart market bubble,this article tries to provide a scientific and reasonable reference tothe judgment of art market’s operation status,with some further suggestions aboutdeveloping China’s art market healthily.