Total Social Financing Relationship With Stock Prices

Total social financing has become an important indicator of the presentstudy macroeconomic policy, the economy, financial development, alsobecome an important intermediate objectives of macro control for centerbank. Stock market is the important target of monetary policy for monetaryauthorities, in-depth understanding of the relationship between the total socialfinancing and stock prices can make better reflect the community’s overallfinancing conditions, conducive to accurate implementation of monetarypolicy and reduce undue influence on the stock market, and effectivelyexplore the stock market operation rules.This article uses both theoretical and empirical aspects，deconstructionof the total social financing, dialysis stock price formation mechanism,discuss the monetary policy conduction mechanism that through the stockmarket，identify the correlation between the total social financing and stockprices. I hope to be able to provide some reference suggestions to macropolicy makers and micro-investors.For theoretical research, the stock market is mainly based on the generaltheory of monetary policy transmission and the monetary transmissions. Forempirical study, by studying the monthly value of total social financing andthe CSI300Index, I use of time-series econometric model to study therelationship between the total social financing and the CSI300Index. In the beginning I use the unit root test methods to detect smooth variables (I findthe data is smooth, so eliminating the step of co-integration test), followed bythe establishment of Vector Autoregression (VAR) model, and Grangercausality test, impulse response function analysis, and then did a systematicand comprehensive study of the relationship between the total socialfinancing and stock price.Var model results shows The CSI300Index has weak positivecorrelation with the lagged monthly values of the total social financing, and aweak negative correlation with the two phases lagged monthly value. Acloser look at the reasons, the stock price is affected by many factors, andtotal social financing only is the reason from the perspective of macro-monetary impact of the stock price, other effects such as the impact of theindustry, companies such as micro factors may be have greater impact.