The Impact Of Stock Margin Trading On China A-Share Price Volatility

On March 31,2010,China formally introduced the margin trading,which provides a richer trading model for the Securities Exchange market.When the stock market is forecast to rise,investors can raise money to buy securities to get more benefits.When the securities market is expected to fall,investors can gain by borrowing securities and selling them again.Margin trading is the hallmark of a new trading model.The development of margin lending in China has also undergone a process of rapid developing from the pilot to the conventional,the number of participating securities from the few to many,the business model become diversified(such as transit business).The balance of margin trading is increasing every year,and the impact of margin lending on China's securities market is increasing.The research of this paper is divided into two parts: Theory and demonstration.In the aspect of theoretical analysis,the paper first reviews various literatures about the influence of margin trading on the market,and also introduces the effect of margin trading system on stock market fluctuation in theory.Then in the empirical analysis,from the unilateral rise of the securities market and unilateral decline in the securities market to analyze how the margin of credit to affect the volatility of the securities market.In the empirical research part,this paper starts from two special market performances of unilateral rising stock market and unilateral descending securities market,and through a series of manifestation test methods,analyzes the influence degree of margin trading in these two extreme situations on the fluctuation of stock market.Finally,based on the results of empirical analysis,this paper puts forward some relevant policy suggestions from the aspects of risk management,perfecting the mechanism of intermediation,promoting the balance development of financing transactions and margin trading.