The Impact Of Interest Rates On Stock Prices Under The Formation Mechanism Of LPR

Since June 1996,the People’s Bank of China issued the "Notice on Cancelling the Management of Interbank Offered Rate Limits",my country has implemented and practiced the marketization of interest rates for nearly 30 years.In 201 9,the Loan Prime Rate(LPR)was proposed in the loan market.This thesis aims to study the impact of interest rates on stock prices under the LPR formation mechanism.The first is to investigate the situation in the three years after the implementation of the LPR formation mechanism,and the second is to explore the impact of the LPR interest rate on the overall stock market and special industries.According to the classification of securities trading places,this thesis selects Shanghai Stock Exchange Index and Shenzhen Stock Exchange Index as the research content.From the overall market to specific industries,the index of real estate enterprises and commercial banks that are sensitive to interest rates is selected as the research content.Based on the data of interest rate adjustment,the abnormal rate of return and abnormal rate of return are selected as test indicators to study the impact of LPR interest rate on the stock price of the market.The results show that the short-term impact of interest rate on the comprehensive stock index under the LPR formation mechanism is greater than that under the previous interest rate policy,which confirms the progress of interest rate marketization of the interest rate policy.Under the LPR formation mechanism,interest rates have different degrees of impact on the Shanghai Stock Exchange Index,Shenzhen Stock Exchange Index,real estate index and banking index in the short term.The Shenzhen Stock Exchange Index and real estate index have a greater impact on the stock price in the case of lower interest rates than in the case of flat interest rates.They have obtained higher excess returns,reflecting the short-term negative impact of interest rates on the stock price.After the interest rate announcement date,the impact of a decrease in interest rates on the stock price of the Shanghai Composite Index is greater than that of a flat interest rate.However,the banking index is more sensitive when the interest rate is significantly reduced,and its impact on the stock price is relatively significant.Therefore,it is suggested that investors in the stock market should be calm when facing investment opportunities;Commercial banks and real estate industry should base on the development of their main business,reform and improve the internal organizational structure of enterprises,rationally allocate resources,improve their competitiveness,and obtain income growth;The central bank can macro-control the economic environment through the LPR interest rate,standardize the operation behavior of the banking industry and the real estate industry,and stabilize the sustainable development of the social economy.This thesis studies and analyzes the data of the latest LPR interest rate policy in China three years after its implementation,which is innovative in terms of research perspective and time range.It also makes a comparative analysis between the overall securities market and the stock prices of banks and real estate enterprises that are sensitive to interest rates,which enriches the existing literature.