The Impact Of Monetary Policy On China’s Stock Market

The rapid development of China’s stock market and continuous improvement attract more and more investors focus on the stock market. Financing through the stock market has been favored by many investors.The blossom of China’s stock market not only changed national financial structural system, but also promoted the development of economy in China. However, the unstable development of stock market is a double-edged sword, it promotes economic prosperity while disturb the develop real economy due to its instability.The first chapter of this paper aims at the search background, significance and research status home and abroad of the monetary policy’s effect on stock market Chinese explained. The second chapter made comprehensive arrangement and evaluation of the related literature home and abroad, The third chapter conduct a brief introduction of the research methods of this paper and also analyzed the innovation and deficiency of this paper profoundly;the fourth and the fifth chapter is essential to the thesis, they carried out extensive and in-depth study on the influence monetary policy had on Chinese stock market from the theoretical and empirical aspects.It first analyzes the effect of monetary policy on the stock market from the theoretical level, illustrates the interest rate, money supply, social financing scale, the statutory deposit reserve’s impact on the stock price respectively, we could get that the interest rate is negatively correlated with the stock price, while broad money supply, social financing scale are positively correlated with stock prices. The running direction of deposit reserve adjustment and the direction of the stock price index showed no absolute reverse movement, but mixed.Then, the article selected the9-year monthly data from January2005to December2013in a row, conducted empirical analysis on this problem through the VECM ADF unit root test, Johansen co-integration test, Granger causality test, impulse response, variance decomposition and econometrics method. Unit root and co-integration tests the correlation analysis of consistent with the theory, and draws the monetary policy interest rate, money supply, social financing scale. There is a long-term stable equilibrium relationship and two co-integration relationship on China stock market; Granger causality test shows that there is no obvious causal relationship between the variables, and the reality of conflict; finally, through Eviews outputs in the auto regressive model and Its application--impulse response function and variance decomposition that interest rate, money supply, social financing scale respectively influence on stock price, the impact of interest rates on the stock price is strong, broad money supply weaker,and social financing scale the weakest. Finally, the sixth chapter summarizes the full text and put forward some policy suggestions respectively from two aspects of monetary policy and the market itself, in order to improve the efficiency of the monetary policy transmission mechanism of stock market.The results show that, with the development of financial market gradual improvement, China’s monetary policy transmission mechanism has more and more stronger influence. It still needs further improvement. The conclusions of the monetary policy establishment, especially the analysis and prediction of the stock market has great theoretical and realistic meaning.