Research on the Influence of Investor Sentiment on Monetary Policy in China

Abstract

In nowadays China's stock market development faster and faster, increasing the influence of monetary policy on the stock market is directly and quickly, and the change of investor sentiment will affect the conduct of monetary policy effect, under this background, the study of investor sentiment in the monetary policy transmission will have what kind of impact and effect is particularly important. First, an investor sentiment index should be constructed by principal component analysis, and then the Bootstrap test was used to analyze whether investor sentiment has mediation effect. Then, a state space model is established to select the indicators represented by each, and then other influencing factors such as macroeconomic sentiment index are added to further study whether investor sentiment has a significant impact on monetary policy. The empirical results show that investor sentiment has a partial mediating effect in the transmission of monetary policy's influence on stock market, and has a significant positive influence on monetary policy. Analysis results show that if the hope of the People's Bank of China monetary policy can play its role of maximum policy tools you need to like the European and American developed country on the stock market has good effective guidance and adjustment function, which requires as much as possible information output stable monetary policy, for most investors will own analysis combined with rational and accurate information,  A more reasonable expectation forecast is made to reduce the fluctuation range of the stock market and control the situation in the expectation of the state, which is conducive to the stable and healthy development of China's stock market, prevent all kinds of unpredictable speculative and unhealthy behaviors such as buying and selling, and maintain the normal development of the stock market. This requires China to establish more dredged monetary policy transmission channels, and the authorities should focus on introducing foreign professional investors in developed stock markets to drive Chinese investors to improve their professional degree, improve investor structure, reduce stock market speculation, and promote the stability of the stock market.