Analysis and Solution on the Problem of Resource Allocation Efficiency in China Stock Market

Abstract

As a core part of the modern market economy system, the financial market has a direct impact on the development of national economic construction. Based on Jeffrey Wurgler's Capital Allocation Efficiency Model and relying on the 2007–2014 data of A-share market, empirical research shows that China's resource allocation efficiency is low. The direct factors that affect the allocation efficiency of China's stock market are investor heterogeneity belief, agency cost and enterprise value. Through the multiple linear regression analysis, it is found that the investors' heterogeneous beliefs and agency costs have an inhibitory effect on the efficiency of resource allocation in China's stock market, while the value of the enterprises has played a catalytic role. Investors' heterogeneous beliefs have the greatest impact on stock market resource allocation efficiency. According to the results of the research, a scheme to solve the efficiency of stock market resource allocation is designed. The scheme puts forward the solution from weakening the government's administrative intervention, perfecting the stock market's market mechanism and strengthening the investors' judgment ability. At the same time, the scheme is analyzed from the viewpoints of feasibility, rationality and applicability.