Research on the Influence of Interest Rate Regulation on A Share Market Price

Ke Ma

Abstract


In recent years, interest rate of our country has experienced frequent regulations. Five increases in 2007 intended to cool the over-hot economy and the second half of the year 2008 witnessed four successive decreases of deposit interest rate by the Central Bank of China. It is evident that interest rate is quite popular as an important currency policy instrument. Stating from June 8th of 2012 when RMB loan and deposit benchmark rate of financial institutions was reduced, one-year term deposit rate went down by 0.25% and loan rate 0.25%, the fist reduction since the end of 2008. Besides, interest rate regulation influences currency supply, capital expected rate of return, and enterprises’ capital situation, etc. It will also exert some certain influence on the active stock market.


Keywords


interest rate regulation; stock market; stock price; nominal interest rate

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