The Empirical Study On The Influence Of Short-Term International Capital Flows On The Chinese Mainland Stock Market

Until today the1997Asian financial crisis is still vivid,short-term international capital swept Asia.With the trend of international capital flows freely,our country becomes stronger and economic develop steady.China’s capital market is opening and the pace will be more and more quick. Short-term international capital will go into China vastly.Chinese researches of short-term international capital flows and its impact on the economy are numerous,but the study on the influence of the mainland stock market is relatively simple.This paper will go deep into the research,and we hope to provide weak force for the opening mainland stock market steady development and response to the short-term international capital impact.This article expounds the related basic theory of short-term international capital and its effect on the stock market.Then we analyse the cause of short-term international capital in and out of mainland China,and its influence on the mainland stock market further.We use this formula:short term capital flow amount=foreign exchange reserve assets increment-trade surplus-FDI+hidden short-term international capital in trade surplus and FDI to estimate the amount of short-term international capital flowing into the mainland.We use VAR,ECM,variance decomposition,impulse response function and other empirical analysis method.The results are:short-term international capital has forward influence to mainland China stock market price fluctuations under one year commonly,but it is not the increasing factor of our country’s stock market bubble.At the end of the paper we review and summarize the countermeasures how to deal with short-term international capital flows of international and developing countries.Finally,we give some suggestions about how to deal with short-term international capital flows in China.