An Analysis Of The Impact Of Investor Irrationality On Market Quality

The investors in the financial market is the main investors,the traditional finance assumes that investors are rational,but through empirical research and the rise of Behavioral Finance show that the investors in the market when the transaction is usually non rational,non rational investors said the degree of a popular area.Market quality is the basis of a capital market,the quality of the market is related to the efficiency of capital market resource allocation.This paper explores the influence of investors' irrationality on the quality of the market by means of vector autoregressive model(VAR)and Granger causality test.By investigating the irrational degree of investors,this paper has found that the irrational degree of investors has a good effect on the quality of the market.negative influence.When the degree of irrationality of investors,the market quality tends to deteriorate trend.Granger causality test can be concluded that the irrational degree of investors is the reason for the impact of market quality,the relevant departments through the irrational degree of investors to improve the quality of the market.Through the research of this paper,it can be concluded that the change of market quality index can be predicted by the irrational degree of investors,and the influence of market quality on excess returns under the influence of irrationality of investors is made.The conclusion is that investors are irrational When the degree is high,the change of market quality index is negatively correlated with excess return.Finally,our conclusion and policy advice is to reduce the irrational degree of investors to improve the quality of the market has an important impact,is conducive to the optimal allocation of market resources and market efficiency.