The Impact Of Open Market Operation On China's Stock Market

With the continuous development of financial market in China, the status of the securities market in the financial system is becoming more and more important. The smooth running of the stock market has a vital role to the healthy development of macro economy and social life steadily and orderly. But due to the stock market lately established and incomplete development in China, combined with the unceasing expanding degree of our capital market opening up, the Chinese stock market is facing the situation of "malaise". So the country frequently uses monetary policy tools to adjust the stock market to realize the healthy operation of national economy.Open market operations as one of the main monetary policy, due to its flexibility, initiative and controllable characteristic, governments are increasingly favor it in recent years. Since 1998 our country started a series of reform of the monetary policy, open market operations on the stage. After 20 years of development, the effectiveness of the open market operation has also been gradually enhanced. Whether the operation of the open market operations can be effective control on the stock market? Whether this regulation function will affect the real economy? What is the transmission mechanism from open market operations to the stock market? In order to solve these problems, this article will study from two aspects of theory and empirical, conclusions and gives the corresponding policy suggestions.On the basis of summarizing the domestic and international relevant research results in this paper, firstly introduces the basic concept of open market operations, operating tools and the development of the relevant theory. Then, detailed elaborated the mechanisms and the basic principles of impact of open market operations on the stock market, laying a good theoretical basis for the full text. Later, this paper described the development of open market operations in China, and summarized the existing problems of our country open market operations practice. Finally, empirically analyzes the effects of open market operation on China's stock market using the monthly data between January 2006 and December 2015 by using Cointegration test, granger causality test, impulse effects and variance decomposition in SVAR model.Expounded theory and empirical results show that the open market operations only in the short term impact on the stock price, but invalid in the long run; Open market operations have a certain impact on the stock market, but limited; Open market operations have a similar degree of influence on Shanghai and Shenzhen stock price, but the influence of the money supply and inflation to Shanghai is larger; The influence of interest rate on the stock market is deepened, even more than the money supply on the stock market. It shows that with the advance of market interest rates, our country interest rate transmission channels also gradually become clear. Therefore, we will continue to promote market-oriented interest rate reform, perfect the government bond market, inter-bank bond market and stock market, dredge open market operations conduction channels, and improve the effectiveness of the policy.