Research On The Effect Of Margin Financing Mechanism On The Volatility Of China's Stock Market

In the financial market,the volatility of the stock price makes investors feel nervous.Since July 2014,China's stock market has been rising fiercely,and has ushered in a new round of new trends.China's stock market has entered the first bull market since 2007.In June 12,2015,the Chinese stock market reached the highest point at the present stage.The Shanghai index is about 5178.19,the Shenzhen index is about 18211.76.In the meantime,the Shanghai and Shenzhen stock index rose to total about 150%.The bull market makes the investors get a lot of profits.After June 15,2015,China's stock market came into a bear market.After 3 months,the Shanghai index from 5178 points down to 2850 points,the Shenzhen index from 18211 points down to 9259 points.Thousands of stocks have plummeted.Countless investors had lost a lot of money,being deep in the stock market.Since then,the leveraged financial margin business has been disputed.Therefore,it is necessary to analyze clearly the relationship between margin trading mechanism and stock market volatility,so as to provide trading references for individual investors and institutional investors and other related economic entities.In the beginning of this article,I have arranged and analyzed the domestic and foreign scholars' research literature.Secondly,this paper makes a brief analysis of the basic theory of financing margin mechanism.Then the article further analyzes the influence mechanism of the financing margin on the volatility of the stock market.Then,the dual difference model is established in this paper according to the conventional practice.The sample period is from September 23,2013 to September 22,2015,with a total of 489 trading days.This paper makes use of the dual difference model to discuss the relationship between financing margin and the volatility of China's stock price.Finally,this paper puts forward relevant policy suggestions aiming at the conclusions from theoretical and empirical research and the problems of financing margin.The empirical results of this paper show that the opening of margin trading can really inhibit the volatility of the stock market,play a stabilizing role in the upward direction of the stock price,and also play a stabilizing role in the downward direction of the stock price,and the intensity of inhibition in the upstream direction is greater than that in the downlink direction.After the dynamic effect test,it is found that in first months,second months and third months after the implementation of the policy,the margin financing mechanism still plays a stable role in the stock price.A series of stability tests have been done further,and the above results are still established.