Relationship Between Shareholding Behaviors By Insurance Funds And Stock Price Stability

Under the background of "strict supervision",the role of insurance funds arouse widely discussion.On March 5th this year,the two sessions proposed that insurance funds can play a promising role in developing multi-level capital markets,supporting private enterprises and small or micro enterprises.Therefore,it must be practical significance to discuss the impact of insurance funds on the stock price fluctuation of listed companies and achieve the balance between economic efficiency and financial stability.The paper aims to find out whether the insurance investors play positive role in market stability.According to the different characteristics of shareholding behaviors,the paper divides insurance investors' behaviors into short-term shareholding,long-term shareholding,long-term large shareholding and long-term small shareholding behaviors.And then establishing a difference-in-difference PSM model using quarterly data of A-share public companies from 2005 to 2018 to analyze the impact of shareholder behaviors by insurance capital on market stability.The paper shows that stable shareholder behaviors can restrain the volatility of the stock market effectively.The long-term shareholding behaviors and the stock turnover rate are significantly negatively correlated,which means insurance funds are helpful for stabilizing the market.Furthermore,insurance funds who hold the large shares in the long term makes a greater contribution to the stability of stock market than the one who hold a little when the market experiences big bubble and crash.And despite insurance funds' short-term speculation makes market fluctuate a lot in the bull market,they act as buy-and-hold value investors in the bear market.Therefore,the insurance funds who are significant shareholders in the long term makes the market more stable.Based on signaling theory and imperfect information game theory,the paper further studies the influence mechanism.The way for volatility-reducing is releasing the signals to private investors that the list-companies with good qualifications are suitable for holding in the long run which can suppress their irrational speculation.The inflow of private investors is the intermediate variable.By reducing the inflow of private investors,insurance funds ultimately promote a stable and steady market.Finally,this paper puts forward relevant policy suggestions:to take the different view of the impact of insurance investment on the stock market and carry out "strict supervision" structurally.Giving more support to insurance investors with behaviors of stabilizing the market,which can promote insurance funds to keep financial market stability and realize mutual benefits.This paper will help to further understand and evaluate the stability and impact mechanism of insurance fund shareholdings on the stock market.