The Impact Of Money Supply And Its Constructing Indices On A Share Prices

It has already been testified by papers researching Chinese stock market that, money supply has some of effects on A share prices. However, scholars are still confused about which index could best explain the fluctuation of stock prices and how early it would change before A share prices. By applying ADF test, cointegration test and Granger causality test, this thesis is aimed to screen the most explainable money supply indices. As the result of empirical analysis, M2 and time deposits of enterprises are demonstrated as the most powerful indices to explain the fluctuation of prices on main board and usually affect the stock index after five periods of time. However, the price index of Growth Enterprise Board is proved to have no significant relationship with money supply and its constructing indices.