An Empirical Study Of Interaction On The Main Board And The Growth Enterprise Market

October30,2009, the first batch of GEM stocks hit the market, which marked animportant step in the construction of the multi-level capital market in China.Multi-level capital market means to segment management to finance-raiser ofdifferent risk preference and investors of different risk appetite. Each market isindependent to each other. The development of one market’s systemic risk does notaffect another market, which meets the financial needs of the investors and financiersof different nature, and maximizes market efficiency and risk control ability. Thelaunch of the Growth Enterprise Market (GEM) has important strategic significance.It is an important measurement to improve the multi-level capital market, to meet thefinancing needs of high-growth innovative companies in the early growth stages, andthe investment needs of high-risk investors. The launch of the Growth EnterpriseMarket (GEM) as should be run independently from the motherboard market, governits own operation. It will benefit the development of capital markets in the future, andcreate a healthier and stable environment, which can further improve the function ofthe capital market. Will the GEM be launched? Can the intention of GEM be keptconsistently and independently? Will both markets individually operate steadily andhealthily? The answers are not very clear. However, answering these questions has avery important reference value choosing the mode of the capital markets and relatedsystem as well as establishing a multi-level capital market system.First, this paper introduces the research background and significance of the study,summarizes and comments on the research status, and describes the research contentand methods, as well as research ideas.Secondly, in this paper, Summary of main board and gem market situation, forthe following positive analysis provides the basis.Thirdly, the paper conducts a empirical research on the Main Board and GEMmarket. The first correlation coefficient analysis of the relationship between the two isused to determine an existing relationship. Then the unit root test is used to determineGranger causality, cointegration analysis. It helps explain and clarify the relationshipbetween the two markets.Lastly, the paper elaborates on the significance of the interaction between theGEM market and the motherboard market. The interaction can help make policy recommendations to improve the GEM mark and promote the healthydevelopment of China’s multi-level capital market.