A Study On The Correlation Between The Chinese Stock Market And Economic Growth

“The stock market is an indicator of the national economy”,this paper starts from this idiom and checks whether there's a correlation between the Chinese stock market and economic growth.This study shows that the stock market has the function of collecting money,spreading risk,improving the distribution of resource,revealing information,and improving the management of the company.Thus the stock market can accelerate economic growth through increasing the deposit-invest convention ratio,resident deposit,capital output ratio and promote science,techonology and innovation.Meanwhile,when the national economy improves,national income,resident demand,and macro-economic environment will all be improved.Thus,the scale of the stock market will be enlarged,its structure and related institutional construction will also be strengthened.Having a review of the history of the Chinese stock market,it originated from the end of Qing Dynasty.And then the PRC received the old market of the Qing Dynasty,but laid it aside because of some political reasons.After reforming and opening-up,especially since the found the Shanghai Stock Exchange at 1990,the Chinese stock market has been fully developed.Having a review of each period of the history again,the stock market has been contributing a lot to the economy of each period.As for the empirical study,this paper selects several related indexs and implements ordinary regression analysis,regression analysis of the period before and after the reform of non-tradable shares,and vector auto-regression.The outcome shows that the Chinese stock market and the economy promote mutually,which is in accordance with the theory,but the significance is weak.The possible reasons of the weak significance might be that there exists flaws in the operation system of the Chinese stock market,or poor regulation,or too much governmental interference.To improve the stock market in promoting the economic growth more efficiently,we should strengthen the top-level design,and improve the related institutional construction and the flaws of the operation system.