Dissertation > Economic > Fiscal, monetary > Currency > China's currency > Principle of policy and its elaborate

Impact of deposit reserve rate adjustment on the stock market Chinese

Author LiQiong
Tutor YinYuMing
School University of Electronic Science and Technology
Course Business Administration
Keywords the deposit reserve policy the stock market monetary policy Transmission mechanism
CLC F822.0
Type Master's thesis
Year 2011
Downloads 273
Quotes 1
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The deposit reserve policy is one of China central bank’s three magic weapons, and also one of the important policy tools effect on our country’s stock market. Since 2010, China’s central bank raised the reserve requirement 12 times consecutively, of which in the first half of 2011, the central bank has raised 6 times with monthly frequency. Visible, the central bank attaches great importance to reserve policy, which be seen as a powerful weapon to control macroeconomic regulation. And every time before and after the adjustment of the deposit reserve ratio can cause the investors’attention, both from the central bank policy level and the angles of investors expect will have great influence. At present, Chinese has a narrow investment channels, the bond market is underdeveloped, so the stock market has become the main investment channel for urban residents.The state macro-control policy has been a great influence on the stock market; China’s stock market has also been named as the "policy market" by a number of domestic and foreign experts and scholars. According to central bank data show that since 2007 China has raised the deposit reserve ratio several times; September 25, 2008, the central bank monetary policy began to shift, the first time in two years cutting the deposit reserve ratio, while the Shanghai Composite Index also just in the September hit its lowest point after financial crisis. Thus, the central bank monetary policy implementation has a greater impact in China’s stock market. To study the impact of national policy on the stock market both for the majority of institutional investors and small individual investors is of great significance. Stock market ups and downs is depended on market funds situation, and the deposit reserve ratio adjustment directly determine the supply and demand of market funds, which has straightforward and obvious impact on the stock market.At the first this paper elaborates on related theory of monetary policy at home and abroad to influence the capital market, especially the influence of deposit reserve policy on the stock market; Secondly introduces the development course, main content and evaluation of deposit reserve policy, on the basis selecting the 2008 to 2010 years of the stock market data, applying the event study on the deposit reserve ratio adjustment on the stock market affect the empirical analysis; The result indicates: on the contrary of the traditional classical theory of western economics, in China our deposits reserve ratio adjustment on the stock market is not significant, or even contrary to the situation. (such as April 16, 2008, the central bank announced to raise deposit reserve ratio, meanwhile, investors won a positive excess rate of return); Finally, based on the cause of the state this paper carry out a detailed analysis, and put forward some suggestions on further reforming deposit reserve system and improving Chinese stock market. The result of this paper comes from empirical analysis of the scientific method, and the conclusion of the study has certain practical value, which provides effective and feasible suggestions for government policies formulation and the stock investment decision, and also conducive to further standardize and perfect China’s stock market.

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