Research On The Causes Of Liquidity Crisis In China’s Bond Market

In recent years,with the rapid development of China’s financial market,the proportion of direct financing in the total social financing continues to improve.Bond market plays a major role in the China’s direct financing market.The data show that up to the end of 2016 the amount of China’s bond custody is $58.14 trillion yuan;China’s bond market has ranked the third only to the United States and Japan.Since China announced the scale of social financing data in 2012,enterprise bond financing has become the second largest financing mode that is only behind loan financing either in stock or incremental social financing.By the end of 2016,China’s social financing scale of stock is up to 155.99 trillion yuan,of which the stock of enterprise bond financing for 17.92 trillion yuan,accounting for the 11%;The scale of social financing scale increment was17.8023 trillion yuan in the 2016,enterprise bond financing contributed to 2.9993 trillion,accounting for 17%.While the scale of social financing scale increment was 15.7631 trillion yuan in 2012,of which enterprise bond incremental financing for 2.2551 trillion yuan,accounting for 14%.Benefiting for the support of national policy,China’s bond market maintains prosperity and development.the number and types of the market entities is increasing,the product has been continuously enriched,the scale of bond financing is continuously rising with systems’ improvement,which provide an important guarantee for the rapid development of economic capital.Therefore,the healthy,stable,orderly and rapid development of China’s bond market play an important role in maintaining the healthy development of financial markets and the real economy and realizing the transformation and upgrading of the economic structure.However,since the financial crisis broke up in 2008,the rapid development of China’s bond market is not smooth sailing,it suffered a total of four liquidity crises.In this paper,the research object is the four liquidity crises after the 2008 financial crisis and the purpose is to sum up the main causes of China’s bond market liquidity crisis through the comparison and data analysis.The results show that the liquidity crisis is closely related with the seasonal factors,the RMB devaluation factors and credit events,but these are not the determinants,just to boost or strengthen the tight of liquidity;The funding gap caused by the growth of social financing demand and restrictive monetary policy is the main cause of the two liquidity crisesbroke out at the end of 2011 and 2014.While deleveraging policy carried out by regulators caused by the high leverage and serious maturity mismatch of financing institutions,is the main reason for the two liquidity crises broke out in the middle of2013 year and at the end of 2016.China’s economic growth after the financial crisis excessively relied on monetary stimulus and strong real estate investment,which caused the real economy became more and more weak,serious excess capacity,the virtual economic prosperity,while the long standing dual financing structure intensified the contradiction of the low efficiency of capital allocation,causing the excessive retention of funds idling in the financial system,that is the root cause of the liquidity crisis.Finally,based on the causes of four liquidity crises,the author puts forward two suggestions to prevent and deal with the liquidity crisis from the aspects of enhancing cooperation among supervision department,financial institutions and enterprises and controlling liability scale.