The Empirical Study On The Impact Of Margin Trading On Chinese Stock Market

Margin trading is a product of market economy and has been applied widely in western developed countries.Since its launch in 2010,Margin business has gained Brilliant achievements.Nevertheless,the lack of time to develop brings on lots of shortages,such as the conflict of margin trading and short selling,the imprecision rules for margin trading and etc.Thus an increasing number of people from academic and financial circles begin to discuss the question of how to improve the instancing mechanism.But since China introduced the margin trading mechanism lately,and the relevant empirical study is relatively insufficient,the paper will deeply analyze the influence of margin trading on China's stock market,and will also combine the empirical researches in order to provide reference and support to the domestic margin trading system.The stock market volatility and liquidity being the entry point,and the data of Shanghai and Shenzhen in the year 2015 being the sample,the paper constructs a VAR model to make regression analysis,impulse response analysis and VAR decomposition,Grange causality test,empirical research.The paper finds that margin trading in China cannot reduce the volatility of the stock market,on the contrary,it will increase the level of stock market volatility and margin trading and even bring about a greater influence of stock market volatility of financing transactions.Regarding to the researches and references,to exert the influence of margin trading further,the paper comes up with a series of suggestions which require the relevant departments to expand the scale of margin trading,increase the kinds of flexible securities to further improve the stability and fluidity of market.As for security companies,they should strengthen the education of investors,widely deliver relating information to them,as well as conduct deep investigations of them.After that suggestions requires these companies to classify investors properly,set rational threshold of margin trading and short selling and keep careful watch of investors' situation after they open up accounts.Other relevant departments should establish a credit system and the securities rating system as soon as possible to ensure the security of Chinese stock market as well as to improve the stability and fluidity to maintain the healthy and orderly development of Chinese stock market.