The Impact Of Short Term International Capital Flows On The Stock Market Of Developed Economies After The Crisis

Nowadays the number of short-term international capitals is large; the speed of short-term international capitals is rapid; the investment channel of short-term international capitals is diverse. The financial crisis occurred from emerging economies to developed economies and China sped up the internationalization of the RMB and the capital opening. So this paper focuses on developed economies which under the impact of sub-prime mortgage crisis in United States, the European sovereign debt crisis and the sterling crisis and discusses the variation in numbers, flows, and the investment structures of short-term international capitals. Then the paper discusses the impact on developed economies exchange rates and stock prices. Finally the paper hopes to provide international experiences and small force on the impact of China's financial markets of short-term international capitals.This paper firstly expounds theories of short-term international capitals and defines definitions, characteristics and measurement methods of short-term international capitals and uses the IS-LM-BP theoretical model to analyze the impact on the stock markets. Then this paper uses data to analyze changes of the characteristic, quantity and investment structure of short-term international capitals of the United States, Europe and Japan after the sub-prime mortgage crisis. The international capitals flowed from developed economies to emerging economies. Thus it can be seen the form of the traditional triangle international system of America, Europe and Japan collapsed and emerging economies joined the international capital flow patter.The short-term international capitals of the United States were vulnerable to the impact of the financial crisis. It was very sensitive to the financial crisis and the Federal Reserve bailout behaviors. While European short-term international capital were from flowing out to flowing in. Japan's short-term international capitals had been in out of state. Europe showed the characteristics of the feature of "seesaw" during the crisis, and the direction of international capitals, the changes of exchange rates, direct investments and portfolio investments had the opposite characteristic from the United States. While the international capital investment structure of Japan was similar to the United States. After that this paper built the VAR model and impulse function of exchange rates, short-term international capitals, interest rates and stock prices of the United States and the Europe. Research showed that short-term international capitals flowed in by two paths, that were exchange rates and interest rates, to the stock markets of the U.S. and the European. Due to the other developed financial markets of the United States, short-term international capital inflows will ultimately lead to the slightly decrease of stock prices; While the short-term international capital inflows would eventually lead to the big percentages rise of the European stock markets. At the end, the paper put forward to strengthen the monitoring of capital flows, pay attention to the developed economies, promote the reform of RMB exchange rate, develop China's capital market and promote the reform of the stock market.