The Influence Of Monetary Policy On The Liquidity Of Financial Market

In recent years,with the rapid development of economy and the improving of reform and open,and because of the background of China's socialist market economy,the composition of China's financial market has become more complex and the composition of the financial market has become more diversified and operational.Hybridization makes the expected return of the financial market hard to predict.All of the above make the expected gains in our financial markets have become difficult to predict.As the liquidity of financial market is an important index to measure the expected income,its fluctuation and correlation play a very important role in the healthy development of financial market.After a long period of development,the size of the stock market and the interbank market in China has a global,profound,extensive and long-term impact on China's financial markets.Compared with other financial markets such as gold and bonds,the stock market and interbank markets as the representative of the high-liquidity financial sub-market,are highly representative in terms of scale,trading volume and coverage industries.Their changes in liquidity can largely reflect and reflect a change in the overall financial market today.Therefore,this paper chooses the stock market and interbank lending market as the representative of China's financial sub-market,and expects to find out the way and degree of the central bank's monetary policy will affect the liquidity of the financial market under the background of China's unique socialist construction road and planned economic system.In order to put forward suggestions and Countermeasures for the formulation of monetary policy in line with China's national conditions,and promote the sustained and healthy development of China's financial market and even the national economy.The "three-dimensional" theory and model proposed by Amihud and Mandellson in 1986,taken as to measure the liquidity of financial markets as to the theoretical basis through comparative analysis.The VAR(Value at risk)modelestablished by Gu ZhuangHai and Chen Wenjie in 2016 used to estimate relevant parameters and quantify the liquidity of the stock market and interbank market by the central bank monetary policy.Some precision processing of the data are carried in order to ensure the scientific and representativeness of the data collected by the empirical analysis,which are clouded.Firstly,the data sample with good fluidity and large capacity is chosen in order to reduce the experiment error and make the experimental result more accurate.Secondly,the extreme value in the data is be to deal with in order to reduce the influence of the extremum on the analysis.Thirdly,the weighted average data of the monthly is chosen,which is helpful to reduce the test error.The data of the monthly data of A-share listed companies in Shanghai-Shenzhen 300 Index from 2013 to 2017 and the CHIBOR and SHIBOR from the 2013 to 2017 are collected,and the generalized currency(M2)and the overnight lending rate e(R),which are chosen as the representative of China's monetary policy in this paper.Firstly,the stationary of all the data is tested and then,the VAR model was determined.The data obtained by the above test,which was calculated by using the determined VAR model to estimate the liquidity index of the stock market and the interbank short-term loans market.The results were tested by using Granger method,and they are tested with correlation test and impulse response analysis.The results and conclusions of the empirical analysis are obtained as following by comprehensive analysis:1.China's monetary policy will have a significant impact on the liquidity of the stock market and interbank market.However,the way,the extent and the length of the action by the monetary policy are much different.The liquidity of the stock market affected by China's monetary policy is sensitive and intense,but the impact time is relatively short,also is quickly tend to smooth;the volatility is relatively narrow.This means that the effect of monetary policy on the stock market is more short-term effect,but the impact is limited.However,the effect of monetary policy on interbank market liquidity is relatively slow,but the impact time is relatively long.The impact of monetary policy on interbank market is little in short-term benefits,but long-term effect is more obvious in other words.2.The correlation between liquidity of the China's stock and interbank market is very weak,and the strength is not very fast and will tend to smooth.That is,the liquidity of another financial sub-market will cause a small and lagging negativeimpact,and then may tend to stability in a relatively short period of time when one of the financial sub-market liquidity changes.The following policy suggestions are proposed,according to the situation of our country and financial market,as well as the empirical conclusions of this paper:1.The monetary policy is used rationally as to regulate the market scientifically and rationally,especially to pay attention to regulate prudently,stably and accurately.The stability of the financial market will be ensured by the effectively and reasonably regulating measures on the stock market and interbank short-term loans market liquidity.2.The measures such as reducing the entry and exiting barriers in interbank short-term loans markets are taken to inject fresh impetus into the interbank short-term loans market.To enrich its trading subjects and develop diversified qualified investors and improve the participation of non-banking financial institutions,non-financial institutions,listed companies and enterprises in the market,as well as to improve the impact of capital utility.At the same time,they may also improve the circulation of funds in the interbank market in the stock market.3.By learning and drawing on advanced experience from which is the United States as the representative of the developed Countries interbank market construction and management,the national peer lending funds with reserve positions as the main content should be established.It is also that the implementation of the national peer-to-borrow funds broker-mediated transaction-based and direct trading supplemented by the model should also be carried out,as to eliminating illegal transactions,stabilizing the liquidity of interbank borrowing and improving efficiency at the same time.4.The changes in stock market liquidity and interbank market liquidity should be paid more attention.And it is that should be taken in incorporating them into the new monetary policy reference indicators,to enable the central bank to have a more comprehensive understanding of the current market characteristics to a certain extent,so as to formulate a more scientific and reasonable,more accurate and effective monetary policy.The difficulties encountered in the sample data selection in the empiricalanalysis of this study,the VAR model established in the 2016 literature by the two authors of the Chen Wenjie,and the possible shortcomings of the monetary policy on the liquidity of the stock market and interbank market are discussed.The all things of further improvement and next research are also proposed at the end of this paper.