The Impact of China’s Monetary Policy on Stock Prices

The topic of this paper is the impact of Chinese monetary policy on stock price, and the importance of this study is mainly reflected with capital market gradually becomes a crucial feature of China's future economic development, the stock market, as a vital component of the capital market, is attracting more and more attention from the monetary authorities for its importance. In light of the aforementioned, this paper uses the M0, M1 and M2 data from 2010-2021, THE closing price of CSI 300 and the Shanghai interbank lending rate to build the VAR model to investigate how monetary policy affects stock prices. and the data in this paper are obtained from the CSMAR database and the Flush database. The study finds that although the money supply has a positive effect on stock prices and interest rates have a negative one, stock prices are still mostly controlled by their own fluctuations. This research offers some policy ideas based on this result.