| In the economic underground of financial liberalization and financial innovation, at the same time, the economic growth in our country keeps in a low speed, and also promotes the development of the breadth and depth of the financial market in China. In recent years, however, the frequent outbreak of financial crises around the world, the slump in domestic stock market boom and the RMB devaluation expectations generated by market players, our financial market is not stable, facing s serious shortage of confidence in the market. The fluctuations in market confidence will also affect the investors to judge the current economic environment and change their future market expectations of the situation. Coupled with the herd behavior affects between market behavior persons, in is easy to cause the spread of the market pessimism, then causing volatility in financial markets.Our country’s monetary policies in macroeconomic regulation and control in the process of economic actively promote the means of monetary policy shift from quantitative to price ways. In the process of using interest rates, credit, asset prices, exchange rates and other channels to act on the financial entities, the central bank also exert positive role of expectations in the monetary policy transmission. Confidence in the market as a kind of emotional psychological expectations, through the transmission channels of monetary policy is expected to affect the financial entities, guiding the market expectations consistent with the central bank’s monetary policy intentions to keep steady. The monetary authorities in our country, also speech in public media many times and make out policies to stress stabilizing the market confidence is the first. Therefore, the research on China’s monetary policy, market confidence and financial market stability, has important theoretical and realistic significance.The paper starts from the relative theories of monetary policy and market confidence. We discuss their relation and influence through the research on market interest rates and money supply amount on behalf of intermediate target of monetary policy and market confidence indices of financial market changes, and then discuss the roles played by the confidence of the market factors respectively in the money market, capital market and foreign exchange market stability.After theoretical analysis, we used the VAR model to establish a vector autoregressive model. Then the Granger causality test analysis concluded that monetary policy adjust the volume of money supply is the main reason for changes in the market confidence, while the market for the adjustment of interest rate is not the change of main reason.The market confidence index is an important reason that affects the stability of money market, capital market and foreign exchange market, but in turn, the empirical result of financial market stability is not significant.Through the impulse response analysis, we found the money market and the capital market confidence index fluctuation had the shared trend of interest rates and money supply in monetary adjustment. Instead, confidence index of foreign exchange market was subjected to the direction of monetary policy regulation.At the same time, it is found that the impact of monetary policy on the financial market is different. Market interest rate fluctuations caused the biggest float in foreign exchange market, but the effects on money market and capital market are small. The money supply factor has the biggest influence on the money market, and a short influence on the capital market, which has little influence on the foreign exchange market. Meanwhile, through the observation of the factors of market confidence, the capital market and money market are vulnerable to the impact of short-term shocks, the foreign exchange market should be more concerned about the changes in market confidence. Therefore, strengthening the management of market confidence will help to achieve the goal of monetary policy to stabilize the financial market. |
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