Keywords: monetary policy, stock market transmission mechanism
Abstract: After more than ten years' development, China's stock market has been growing day by day, becoming an indispensable part of the national economy and known as the "barometer" of the economy. As one of the important means of macroeconomic regulation and control in China, the role of monetary policy has been obviously limited in recent years due to the decline of traditional channels and the obstacles of transmission mechanism. With the vigorous development of the stock market, the relationship between the stock market and the national economy is getting closer and closer, and the implementation of monetary policy will inevitably affect the trend of the stock market. Firstly, this paper gives a brief overview of monetary policy and stock policy, and analyzes the relationship between stock market and monetary policy from three aspects: money supply, interest rate and interbank lending rate. Some suggestions are put forward to improve the efficiency of transmitting monetary policy in the stock market.
Keywords: monetary policy; Stock market; gear train
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Since 1990s, a prominent trend in the evolution of the global economic and financial structure is the sustainable development of the capital market with the stock market as the core. With the continuous expansion of the stock market in the world, the impact of the stock market on the international economy and the domestic economy has also increased rapidly. As the main macro-control means of modern market finance and economy, monetary policy has paid enough attention to smoothing economic fluctuations and promoting the benign, sustained and stable development of a country's economy and finance. Of course, monetary policy and the specific evolution of economy and finance interact and influence each other. The application of monetary policy will have a great impact on the development of economy and finance. On the other hand, the evolution of economic and financial structure will inevitably affect monetary policy, causing changes in the supply and demand of money, the transmission mechanism of monetary policy and even the policy effect. Therefore, the formulation of monetary policy must be based on the realistic economic and financial structure in any case, otherwise monetary policy may be greatly restricted or even made a wrong decision, thus causing great turmoil in economic and financial development. After China's entry into WTO, how to maintain the stability of the financial system and how to improve the economic efficiency of the domestic financial system in allocating monetary resources has become the focus of domestic economic theorists and relevant government departments.
First, the basic theoretical analysis
(A) theoretical analysis of monetary policy
Monetary policy is the general name of the policies and guidelines adopted by the monetary authorities or the central bank to adjust the money supply and money operation environment in various ways in order to achieve macro-control objectives, and then affect macroeconomic variables. Monetary policy is actually another name for the central bank to control the macro-economy through monetary policy tools. It is an important part of a country's economic policy and obeys the requirements of general economic policy.
The first is the goal of monetary policy. The goal of monetary policy is the primary content of monetary policy, including the ultimate goal and the intermediate goal. The ultimate goal refers to the ultimate goal and requirement of monetary policy in a long period of time. Its establishment is closely related to the economic problems in the economic society. Intermediate goals should have the conditions of measurability, feasibility and relevance. It refers to some indicators that the monetary authorities must first master in order to achieve the ultimate goal, and these indicators should reach a certain value within a certain period of time.
As one of macroeconomic policies, monetary policy usually has four ultimate goals: price stability, full employment, economic growth and balance of payments. Their formulation and establishment are the result of changes in economic situation and economic policies. Regarding the intermediary goal of monetary policy, the theories of various economic schools are very different and far from reaching a consensus. However, in the actual operation mechanism, western monetary authorities mainly regard interest rate and money supply as the intermediate goals of monetary policy.
The second is the monetary policy tool. Monetary policy tools refer to the methods and means used by monetary authorities to control the money supply and money operation environment, and to approach the ultimate goal through intermediary goals. Monetary policy tools are divided into two categories: general monetary policy tools and selective monetary policy tools. The former refers to the monetary policy tool that aims at the asset utilization and debt management activities of the whole commercial banking system and affects the credit and monetary situation of the whole economy and society; The latter refers to a monetary policy tool that only affects the credit and monetary situation in some special economic fields, targeting at the asset utilization and debt management activities of some individual commercial banks or some of the asset utilization and debt management activities of the whole commercial banking system. The common monetary policy tools in western countries include open market business, statutory deposit reserve ratio and discount rate policy. The common policy tool is open market business, that is, the monetary authorities openly buy and sell securities in the financial market. By controlling the change of money supply, the open market business can achieve almost any intermediary goal of the monetary authorities, so it is highly praised by many economists. The adjustment of the statutory deposit reserve ratio directly affects the loanable funds of commercial banks, which has a great impetus to the economy but low elasticity, so it is not often used. The discount rate policy makes the monetary authorities have to wait passively instead of taking the initiative. At the same time, it will also produce immeasurable notification effect and interfere with the realization of monetary policy objectives. Selective monetary policy tools include moral advice, statutory margin ratio, consumer credit control, real estate credit control and interest rate ceiling. Their economic supervision is weak and there are some inevitable drawbacks, so many of them have been gradually abolished.
The third is the transmission mechanism of monetary policy. The implementation of monetary policy tools, how to cause some changes in social and economic life and finally achieve the established monetary policy goals, is the so-called monetary policy transmission mechanism. The analysis of the transmission mechanism of monetary policy is mainly divided into the transmission mechanism theory of Keith school and the transmission mechanism theory of western monetary school.
According to the Keynesian school, from the point of view of partial equilibrium, the function of monetary policy is to change the equilibrium of money market first, then the interest rate, and through the change of interest rate, change the equilibrium of actual production field. The basic transmission process is as follows: the implementation of the central bank's monetary policy first causes the increase or decrease of the reserve amount of commercial banks, and then causes the increase or decrease of the money supply, which inevitably leads to the change of market interest rate, and then leads to the increase or decrease of investment, and finally affects the total social expenditure and total income through the multiplier effect.
The monetary school emphasizes that the change of money supply will directly affect the change of nominal national income, and its basic transmission process is as follows: the central bank uses certain monetary policy tools, such as buying securities in the open market, and then the reserve of commercial banks increases, which enhances the lending ability of commercial banks, so interest rates fall and investment and lending expand. Lower interest rates will increase the price of financial assets, which will relatively reduce the prices of physical assets such as durable consumer goods and houses, thus increasing people's demand for such physical assets, making their prices rise and spreading to other physical assets. If this cycle continues, it will increase new money demand and increase the nominal income of its society.
(B) theoretical analysis of the stock market
The stock market refers to the place where stocks are issued and traded. The stock market is an important part of the financial market and occupies an important position in the financial market. The stock market is divided into stock issuance market (primary market) and stock circulation market (secondary market). The former refers to the market where the issuer underwrites or sells shares that have not been publicly issued and traded; The latter refers to the market where issued shares are transferred between investors. The development of stock issuance market and stock circulation market are mutually conditional and promote each other, and together form an organic whole.
The first is the stock price. The behavior of the stock market can be quantitatively reflected by the stock price. Stock price is one of the most important concepts in the stock market, which represents all the trends and behavioral characteristics of the stock market. Stock price includes stock issue price and stock transaction price. The stock issue price refers to the price at which a joint stock limited company publicly sells shares to specific or unspecified investors, which is usually determined by the issuer according to the stock market and other relevant factors. It is influenced by the issuer's income, social reputation, geographical location, supply and demand in the stock market, stock prices in the secondary market, government policies and other factors. Common issue prices are face value issue and premium issue. The stock exchange price refers to the price at the time of circulation and transfer in the stock exchange market, which can directly reflect and change the monetary policy. The stock transaction price is the transaction price when the stock holder (transferor) and the buyer (transferee) buy and sell stocks in the stock exchange market, with the purpose of completing the stock transaction process and realizing the transfer of stock ownership. Like the prices of other commodities, the price of a stock is determined by its intrinsic value and external supply and demand.
Second, the role of the stock market. As a market mechanism of resource allocation, property right transaction, risk dispersion and corporate governance, the stock market has increasingly prominent influence on economic growth and other economic variables. The functions of the stock market are as follows: raising funds for enterprises and promoting their rapid development; Promote technological transformation and renewal of enterprises, improve the degree of marketization of enterprises, and promote the adjustment of national economic structure; Promote the optimal allocation of social resources; Deepen financial reform and improve macro-control means; Change people's way of thinking and behavior.
Second, the correlation analysis between China's monetary policy and the development of the stock market.
When the central bank changes its monetary policy, it will make the money supply and market interest rate fluctuate through the relevant means of monetary policy, so that the social credit funds, social hot money and savings diversion funds flowing into the stock market will increase or decrease accordingly, thus causing the stock market scale and stock price index to change accordingly. The stock price is determined by the intrinsic value of the stock and the relationship between market supply and demand. The influence of monetary policy on the stock market mainly refers to the influence of monetary policy on the stock price index. From the perspective of stock value, when the loose monetary policy starts and the social money supply increases, the total amount of monetary assets held by enterprises and residents increases accordingly. The increase in the amount of money broke the balance between supply and demand of the original amount of money, resulting in a short-term decline in the income of monetary assets. Therefore, the price ratio of social monetary assets and physical assets has changed, and the liabilities and asset structure of enterprises and residents have also changed accordingly. In other words, with the increase in the amount of money in people's hands and the decline in the rate of return on money, people will inevitably invest more money in physical assets, which will lead to a corresponding increase in the price of physical assets. Stock price is the epitome of the price of physical assets. To be exact, the stock price represents the value of physical capital. When the price of physical capital rises due to the increase in the amount of money, the virtual representative of its value-stock price, has already changed because of its strong sensitivity. On the other hand, from the perspective of funds, the implementation of any monetary policy will inevitably affect the amount of funds in the stock market while changing the total amount of social money. The increase of incremental funds in the stock market will change the relationship between supply and demand in the stock market and cause the stock price index to rise. Once the loose monetary policy is implemented, even if the investment inclination of enterprises and individuals has not changed, people's asset structure will not change, and the absolute amount of funds in the stock market will increase accordingly. This is because the increase of social money supply will flow into the stock market and other fields in the same proportion as the original stock market funds and peripheral funds. Similarly, tight monetary policy reduces the amount of stock market funds in the same proportion and way. Of course, different monetary policy means, or the length of monetary policy implementation, will have different characteristics on the impact of stock market funds. Therefore, the implementation of monetary policy can change the intrinsic value of stocks and the relationship between supply and demand in the stock market at the same time, thus having a significant change effect on stock prices.
The influence of money supply on stock market
First, adjust the influence of money supply on the stock market. The central bank can adjust the money supply through the statutory deposit reserve ratio and rediscount policy, thus affecting the supply and demand of funds in the money market and the capital market, and then affecting the stock market. If the central bank raises the statutory deposit reserve ratio, it will greatly limit the ability of commercial banking system to create derivative deposits, and through the role of currency multiplier, the money supply will be greatly reduced and the stock market will tend to fall. Similarly, if the central bank raises the rediscount rate, the capital cost of commercial banks will increase, the market discount rate will rise, social credit will shrink, and the supply of funds in the securities market will decrease, which will make the stock market tend to be weak; On the contrary, if the central bank reduces the statutory deposit reserve ratio or rediscount interest rate, it will usually lead to a rise in the stock market.
The influence of money supply on stock price has three manifestations. First, the increase of money supply can promote production, support the price level and prevent the decline of commodity profits; This will increase the demand for stocks and promote the prosperity of the stock market. Second, the increase of money supply leads to the rise of social commodity prices, and the sales income and profits of joint-stock companies increase accordingly, so that dividends in the form of money will rise to a certain extent, which will increase the demand for stocks, and thus the stock price will rise accordingly. Third, the continuous increase of money supply leads to inflation, which often leads to false market prosperity and the illusion that corporate profits generally rise. The awareness of value preservation makes people tend to invest their funds in precious metals, real estate and short-term bonds, and the demand for stocks will also increase, thus raising the stock price accordingly. It can be seen that the increase or decrease of money supply is one of the important reasons that affect the rise and fall of stock prices.
The second is the influence of open market business on the stock market. Open market business refers to the policy behavior of the central bank to openly buy and sell securities in the financial market to regulate the money supply in the market. When the central bank thinks that it should increase the money supply, it buys securities (mainly government bonds) in the financial market; Instead, it sells the securities it holds. When the central bank buys a lot of securities, the money supply in the market will increase, which will push down the interest rate, reduce the cost of capital, expand the scale of enterprise investment and increase household consumption, expand production and increase profits, and then push up the stock price; On the contrary, the stock price will fall. The operation of China Central Bank's open market business is directed at the national debt, which will directly affect the change of supply and demand and the fluctuation of the national debt market, and then affect the market changes of the stock market. Open market business includes bond repurchase and reverse repurchase. Repurchase refers to the business that the central bank agrees to buy back the above bonds at an agreed price at a certain time in the future while selling bonds to commercial banks. Its essence is that the central bank borrows funds with bonds as collateral in order to withdraw funds; On the other hand, reverse repurchase is the opposite of positive repurchase, and its purpose is to put money in. Because the operation of forward repurchase and reverse repurchase will affect the money supply in the market, it will often have a certain impact on the stock market. For example, after the blowout on June 24, 2002, the central bank's open market business immediately changed from reverse repurchase of invested funds to positive repurchase of returned funds, which lasted for half a year and accumulated 243 billion yuan of returned funds, during which the market fell all the way. It can be seen that the supervision tools of open market business have had the first and most direct impact on the stock market.
(B) the impact of interest rate policy on the stock market
As an important tool of monetary policy, interest rate is not only transmitted in one direction through commercial banks and the money market, but also regulates the real economy through the intermediary of the stock market. Interest rate is a sensitive indicator of the stock market. Every interest rate adjustment by the central bank, even investors' expectations of interest rate trends or rumors of interest rate changes in the market are easy to cause stock price fluctuations. The influence of interest rate on stock price is mainly realized through the following ways: first, the change of interest rate will make the income structure of different investment tools change accordingly. When the central bank lowers the interest rate, the income from holding bonds will be lower than that from stocks, and these bondholders will sell bonds and invest in stocks, thus pushing up the stock price, which will inevitably provide a broader market space for enterprises' stock financing activities. With the increase of stock issuance and financing, the investment of enterprises will expand accordingly, and through the role of investment multiplier, the growth of social investment, consumption and income will be further promoted. On the contrary, if the central bank raises interest rates, the stock price will fall, which will further reduce the ability of enterprises to raise funds in the stock market and the enthusiasm of physical investment, and further reduce the scale of social income, consumption and investment under the action of investment multiplier. Secondly, changes in interest rates will have an impact on the company's profits. When the interest rate increases, the company's loan cost increases and the company's profit decreases, which will affect the production and operation of enterprises, thus lowering the stock price. In addition, for investors, the increase in interest rates will have a greater impact on short-term stock trading that relies on bank credit for stock mortgage trading or margin trading, increase transaction costs, lead to a decline in stock demand, and thus lead to a decline in stock prices.
The existence and development of the stock market makes it possible to divert savings, while the reduction of interest rates makes it a reality. From May 1996 to February, 2002, the Bank of China lowered the deposit and loan interest rates for eight times, which reduced the nominal interest rate of one-year time deposits to 1.98%, and the yield after deducting interest tax was only 1.584%. In the case that the stock price is expected to continue to rise for a long time, because the expected rate of return on stock investment is much higher than the rate of return on deposits, some residents convert part of their deposits into stocks and fund investments.
Table 2- 1 1997-2004 China residents' savings and growth rate
199719981999 2000 2006 5438+0 2002 2003 2004 average.
Savings (100 million yuan) 46280 53407 59622 64300 73762 94307110695126196 78571.
The growth rate (%) is19.317.1.67.917. 17。 4 65438+。
Source: Statistical Bulletin of National Economic and Social Development of People's Republic of China (PRC) in 2006, National Bureau of Statistics.
Practice shows that the interest rate adjustment of the central bank can easily cause stock price fluctuations. From 1996 to 2002, in order to expand domestic demand and stimulate consumption and investment, the People's Bank of China lowered the deposit and loan interest rates of RMB for eight consecutive times. 65438+1 May 19961day, the central bank cut interest rates for the first time, and the stock market of Shanghai Stock Exchange responded positively to this positive trend and entered a continuous upward trend; 1 996 On August 23rd, the central bank cut interest rates for the second time, and the one-year deposit rate of enterprises dropped1. 7 1 percentage point, exceeding people's expectations. Stimulated by this news, the stock index hit record highs and reached a high of 804 points at the end of that year. 65438+0998 on March 25th and 1 on July 25th, the central bank cut interest rates again. Although the intensity was not as great as the previous three times, the reserve interest rate was greatly reduced by 2.34 and 1.7 1 percentage point respectively. 1998 12.7, the central bank announced the sixth interest rate cut, and the short time interval of three interest rate cuts in one year is also rare in the history of bank interest rate adjustment in China. However, on the day of the interest rate cut, the Shanghai Composite Index fell to 13 16 compared with the last interest rate cut. On February 2, 2002, the People's Bank of China announced that it would lower the deposit and loan interest rate of RMB for the eighth time, and the Shanghai Composite Index also rose on the first day after the announcement.
Influence of Interbank Offered Rate on Stock Market
Interbank lending rate refers to the short-term capital lending rate between banks. It has two kinds of interest rates, the loan interest rate indicates the interest rate that banks are willing to lend; The loan interest rate indicates the interest rate that the bank is willing to lend. The loan of one bank is actually the loan of another bank. The spread between the loan interest rate and the loan interest rate of the same bank is the bank's income.
The financial system reform that began in the early 1980s can only feel the large-scale adjustment of the financial organization structure, which has changed the situation that the People's Bank of China "dominates the world" through separation and expansion. Various professional banks and various non-bank financial institutions objectively require borrowing funds to adjust the surplus and deficiency. 1984 the people's bank of China implemented a new bank credit system of "real loans, real deposits and mutual financing" after the special form of the central bank's functions, and encouraged financial institutions to make use of the inter-bank differences, time differences and regional differences of funds to borrow. 1986, the State Council promulgated the Regulations on the Management of Banks in People's Republic of China (PRC), which clearly stipulated that specialized banks could lend to each other, and the interbank lending market really started, forming a tangible market centered on Shanghai, Wuhan, Guangzhou and other cities nationwide. However, due to the lack of effective norms, serious violations have taken place in the lending market under the circumstances of over-mature economy and inflation. A large number of short-term loan funds are used for real estate investment, stock speculation or development zone projects, and fixed assets investment, which prolongs the loan term, pushes up the loan interest rate, interferes with financial macro-control, disrupts the financial order, and the market is systematically and regionally divided, reducing the financing efficiency. During the period of 1995, the People's Bank of China cancelled the interbank lending intermediaries such as financing centers and capital markets established by commercial banks and their branches. On this basis,1October 3, 1996 65438+ With the help of the electronic trading system and information services provided by the National Foreign Exchange Trading Center, the national unified interbank lending market established a financing center led by the People's Bank of China in Shanghai, stopped its self-operated business and gradually faded out of the market. Since then, the People's Bank of China has actively promoted the construction of the interbank lending market by increasing market participants and improving relevant laws and regulations. With the deepening of China's financial system reform and the improvement of financial development level, the number of members in the interbank lending market is increasing and the types are more extensive, the contradiction between supply and demand of funds is alleviated, and the transaction scale is expanding day by day.
Interbank lending explains the flow and demand of funds. When there is a great demand for funds in the market, the interest rate of interbank lending will rise, which will lead to short selling in the stock market, but these are all technical theories. The impact on the nature of the stock market is not great, and it should be combined with many other factors, such as forward interest rates, or the real factors that lead to the rise of interbank lending rates or exchange rates. It is of little significance to study the interbank lending rate, only to know the recent capital demand of the market and whether to stay or not, which has no direct guiding effect on the stock market.
Third, measures to improve the transmission efficiency of monetary policy in China stock market
With the further development of China's securities market, the functions of the stock market in transforming savings, stimulating consumption, optimizing resource allocation and conducting monetary policy, thus promoting economic growth will gradually emerge. Therefore, it is an important content of China's stock market development and monetary policy practice to actively learn from foreign theories and successful experiences, construct the basic conditions for the transmission of monetary policy in the stock market, and improve the transmission efficiency of monetary policy.