Research On The Liquidity Between Chinese Interbank Market

The interbank market is an important part of the money market. It provides short-term financing markets, market benchmark interest rate. In various financial markets, the transaction size, transaction frequency of interbank markets is in a leading position. At present, China is in the stage of financial market reforms, especially the interest rate marketing reform. Interbank market’s stability is related to the healthy development of the financial market and the national economy.Liquidity is the fundamental nature of a financial asset and financial markets, but the concept of academic liquidity did not have a clear definition. Liquidity concept itself has rich connotations for different subjects, and the classification can be divided into macro-currency liquidity, the financial market liquidity and financial assets liquidity. Unfortunately, There is no special definition for the interbank liquidity. The difference between definition will lead to different research angles measured by the method. Therefore, these concepts and methods need to sort and integration, and we need evaluation methods.Recently, several China’s financial markets "money shortage" broke. Its essence is illiquidity. However, China’s M2money supply maintains more than12%annual growth, so the liquidity in macro level, does not appear shortages. So What is the measure of liquidity shortage? And what is the factors? In this paper, inter-bank market is a specific object of study, we try to give the definition and the measure of interbank market liquidity, and then based on this, explore the impact of The interbank market liquidity, and finally put forward specific proposals.This paper is divided into three parts, answering "what","why","how to do". The main structure and conclusions are as follows: The first three chapters are the first part. This section is mainly to solve the question "What is the interbank market liquidity". This paper concludes the previous definition of basic concepts about liquidity which is divided into macro-mobility, inter-bank system liquidity and market liquidity. After classification, the paper summarizes the characteristics of inter-bank market, thus contributing to its liquidity scientific classification. After the definition of the concept of inter-bank lending market, measure is defined based on the concept.Chapter IV to Chapter VI is the second part. In this part, we mainly answer "why" questions—the factors of inter-bank lending market liquidity. On the basis of existing research, this paper classify the factors by macro-liquidity, factors related to the other market price, the market concentration, and monetary policy. In the fifth charter, we use the cointegration theory, VAR models to give research on the relationship between the liquidity and the four factors---M2money supply, exchange rate, the overnight interbank lending rate, and the market concentration.The final chapter is the third part, In this part, we answer the question "how to do",which is based on research results from the above. We provide suggestions from three parts--macro liquidity management, the use of monetary policy and the optimizing structure, hoping to help the management of the inter-bank market.