Research On Functional Mechanisms Of RMB Internationalization On Chinese Stock Market

On October 1st,2016,RMB joined the SDR basket.This has become a new milestone in the process of internalization of RMB.So the study of RMB internationalization has been paid more and more attention by scholars.With the deepening of the internationalization of RMB,its impact on interest rates,exchange rates,money supply,foreign direct investment will become increasingly apparent.And then the stock market will be affected.Of course,the internationalization of the RMB can affect all aspects of China's economy.But according to the People's Bank of China issued the report of the RMB internationalization.The more directly impact of the internationalization of the RMB is mainly on the financial side,such as the growth of RMB cross-border settlement under current account,the increase in the use of RMB in direct investment,the increase in the number of countries using the RMB as a reserve currency and so on.And the impact of internationalization of RMB on other industries will eventually be shown through the finance.In order to facilitate the empirical research,this paper mainly selects the financial sector as the representative of the stock market,and later through the empirical proof of the use of financial sector on behalf of the stock market is reasonable.Under the background of RMB internationalization how to accurately grasp the relationship between RMB internationalization and China's stock market and explore the mechansism of RMB internationalization affecting stock price is very meaningful for how to maintain the relative stability of stock prices and promote the healthy development of the stock market.This paper is divided into five chapters.The first chapter introduces the background of this paper,significance of the topic,research ideas,research content and the innovation and deficiency of this paper.The second chapter reviews the relevant paper at home and abroad.Then introduce some basic theories and models used in this paper.The third chapter analyzes the linkage mechanism between RMB internationalization and stock price from the two different perspective of international trade and finance.In the fourth chapter,we use the multi factor model of stock pricing to analyze the determinants of China's stock market.To test whether the internationalization of RMB through these factors affect China's stock market,we use cointegration test,error correction model and other measurement methods to test the influence of RMB internationalization on stock prices and analyzed the rest results.In the fifth chapter,based on the actual situation and characteristics of China,this paper puts forward some policy suggestions to promote the healthy development of China's stock market in the process of RMB internationalizationAt present,the research on the internationalization of RMB mainly focuses on the factors influencing the internationalization of RMB,and the impact of RMB internationalization on China's foreign trade and economy.However,there are few scholars study the impact on the stock market.In this paper,we will research the impact mechanism of the RMB on the stock market from the FDI,money supply,interest rates,exchange rates in four areas.We will use theoretical analysis and empirical test to research the impact of RMB internationalization on the transmission channels of the stock market.It is concluded that the internationalization of RMB has the greatest influence on the stock market through FDI,and the influence of exchange rate on stock market is the smallest.I hope that this paper will complete and improve the topic of the internationalization of the RMB.