Does the Stock Market Affect the Real Economy? An Empirical Analysis Based on China’s Stock Market Liquidity
This article investigates the causal effect between the stock market and the real economy. Based on the data of China’s A-share market from 1998 to 2017, this article uses the fixed-effect model and other methods to find the causal effect from the perspective of the impact of illiquidity at the indi...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Wiley
2022-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2022/7663271 |
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| _version_ | 1850158059842699264 |
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| author | Chao Wang Jia Hao |
| author_facet | Chao Wang Jia Hao |
| author_sort | Chao Wang |
| collection | DOAJ |
| description | This article investigates the causal effect between the stock market and the real economy. Based on the data of China’s A-share market from 1998 to 2017, this article uses the fixed-effect model and other methods to find the causal effect from the perspective of the impact of illiquidity at the individual stock level on enterprise investment decision-making. Empirical results show that stock illiquidity significantly decreases enterprise investment. Information asymmetry is one of the important channels between the stock market and the real economy. The financial constraints and agency conflicts caused by information asymmetry significantly affect the causal effect. Macroeconomic policies to alleviate market information asymmetry can effectively act on the real economy through the stock market. From the microperspective of studying the causal effect, this study controls the time effect and individual effect and further explores the influence mechanism between the stock market and the real economy. Research shows that macroeconomic policies can effectively affect the real economy through the stock market and provides decision-making references for future macropolicy formulation. |
| format | Article |
| id | doaj-art-6b7cf8cb07e34b41b370b8369a5cdf8d |
| institution | OA Journals |
| issn | 1607-887X |
| language | English |
| publishDate | 2022-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-6b7cf8cb07e34b41b370b8369a5cdf8d2025-08-20T02:23:59ZengWileyDiscrete Dynamics in Nature and Society1607-887X2022-01-01202210.1155/2022/7663271Does the Stock Market Affect the Real Economy? An Empirical Analysis Based on China’s Stock Market LiquidityChao Wang0Jia Hao1School of FinanceCollege of International Economics and TradeThis article investigates the causal effect between the stock market and the real economy. Based on the data of China’s A-share market from 1998 to 2017, this article uses the fixed-effect model and other methods to find the causal effect from the perspective of the impact of illiquidity at the individual stock level on enterprise investment decision-making. Empirical results show that stock illiquidity significantly decreases enterprise investment. Information asymmetry is one of the important channels between the stock market and the real economy. The financial constraints and agency conflicts caused by information asymmetry significantly affect the causal effect. Macroeconomic policies to alleviate market information asymmetry can effectively act on the real economy through the stock market. From the microperspective of studying the causal effect, this study controls the time effect and individual effect and further explores the influence mechanism between the stock market and the real economy. Research shows that macroeconomic policies can effectively affect the real economy through the stock market and provides decision-making references for future macropolicy formulation.http://dx.doi.org/10.1155/2022/7663271 |
| spellingShingle | Chao Wang Jia Hao Does the Stock Market Affect the Real Economy? An Empirical Analysis Based on China’s Stock Market Liquidity Discrete Dynamics in Nature and Society |
| title | Does the Stock Market Affect the Real Economy? An Empirical Analysis Based on China’s Stock Market Liquidity |
| title_full | Does the Stock Market Affect the Real Economy? An Empirical Analysis Based on China’s Stock Market Liquidity |
| title_fullStr | Does the Stock Market Affect the Real Economy? An Empirical Analysis Based on China’s Stock Market Liquidity |
| title_full_unstemmed | Does the Stock Market Affect the Real Economy? An Empirical Analysis Based on China’s Stock Market Liquidity |
| title_short | Does the Stock Market Affect the Real Economy? An Empirical Analysis Based on China’s Stock Market Liquidity |
| title_sort | does the stock market affect the real economy an empirical analysis based on china s stock market liquidity |
| url | http://dx.doi.org/10.1155/2022/7663271 |
| work_keys_str_mv | AT chaowang doesthestockmarketaffecttherealeconomyanempiricalanalysisbasedonchinasstockmarketliquidity AT jiahao doesthestockmarketaffecttherealeconomyanempiricalanalysisbasedonchinasstockmarketliquidity |