Research On The Development Of China's Capital Market

The capital market,foreign exchange market and monetary market have different levels of development in the changing international economic environment.The gradual opening of the capital market,the reformation of the exchange rate system and the interest rate liberalization are all advancing.In 2015,the stock market and the exchange market fluctuated violently and the monetary policy was used frequently.These all make people aware of the development of capital market in China is not stable.Therefor this paper will study the functionary mechanism in the stock market,exchange market and monetary market to make sure the development of capital market in our country.My study is based on three theories: the Mundellian Trilemma,incomplete market theory and government intervention theory.The Mundellian Trilemma tell us under the condition of open economy,the independence of its monetary policy,fixed exchange rate and capital mobility cannot be realized at the same time,can only meet two goals,and give up another goal to achieve the purpose of regulation.And capital market as one of the incomplete financial market.There are some defects in the market mechanism.So we need government intervention.In this paper,I will combine theoretical research and empirical research,qualitative analysis and quantitative analysis to study the functionary mechanism in these three markets to make sure the development of the capital market in China.In the aspect of theoretical research,this paper will study the interaction of capital market,foreign exchange market and money market according to the relevant literature.In the empirical study,I will carry on empirical research by the relevant data of China.ThenI found out following results.Firstly,the capital market,which is represented by the stock market and the bond market,will affect the foreign exchange market and the monetary market,and it has a more significant impact on the foreign exchange market.Secondly,foreign exchange market can also affect the other two markets,but the degree of influence is different.Last,the influence of money market on capital market and foreign exchange market is relatively weak.The results show that the Chinese government can not intervene in the capital market and the foreign exchange market through the adjustment of the monetary market.In addition,this paper puts forward some thoughts on the development of the capital market and promotes the stability of the capital market based on the functionary mechanism in the three markets.