Empirical analysis of the influence of the reserve requirement ratio adjustment on the Chinese stock index

Abstract

This paper uses the event study to research the influence of the reserve requirement ratio adjustment on the Chinese stock index. The paper indicates that the reserve requirement ratio adjustment although dose not influence the stock index directly, but still have some indirect effects. Firstly, when the stock market rises or falls. The stock index will not be influenced by the reserve requirement ratio adjustment in a short term. Secondly, when the stock market is in a period of adjustment. Raising the reserve requirement ratio will make the stock index fall, but it will not last for a long time. Thirdly, when the stock market falls obviously. After the policy which is lowering the reserve requirement ratio achieves a certain result. Some investors will invest in stock, but it will not last for a long time yet. Investors' viewpoint on the stock market bearish expectations do not change.