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uidity, but through different channels acting on inflation, then creating credit to support and promote the rise in asset prices. This situation lasted for about two years. Of course, the creation of liquidity may also be accompanied by the expansion of economic activity and inflation pressures increased, rather than the expansion of asset prices, such as the year before and after 2003 in China.

The increase in credit market interest rates in the fourth quarter in 2007 is a turning point; it reversed the continued downward trend in interest rates in the third quarter of 2005. At the same time, the revaluation of the Chinese market and the increase of the process of synchronization is a decline in interest rate, and the market period of decline in other basic synchronization is also a rise in interest rates. Since the first quarter of 2008, the stock market in China has been far beyond expectations of all the investors for the rapid decrease in the large scale of stock price.

From the point of view liquidity supply, the trend of capital inflows may be the maintenance of high and even expanding; taking the changes in the direction of the real economy into account, the trend of credit control may be tight after the first song, as well as, the trend in the supply of liquidity should be about high after the first low. In other words, in the short term, the credit control leads to tighter liquidity or even shortage, the existence of asset markets may also have some pressure, the pressure can track from changes in interest rates in the credit market and consider the imbalance of the market itself to infer. In the medium to long term, the trend of assets revaluation is still clear and the bull market in China will still exist.

The average earnings as a percentage of book value also exhibit large variation over period. What is interesting is that the in China average earnings scaled by book value are higher than in more advanced countries. This difference in earnings may be an influence of the degree of business risk associated with the specific economic environment in China. The environment in the developed markets is more competitive as firms have to compete not only with many domestic competitors but also with many foreign rivals.

But the business environment in China is not so open and less competitive. Chinese companies are protected from internal and external competition with entry barriers and large scale and numbers regulation. In addition to that, many sectors in China, such as high-tech sectors, electronically communication sectors and industrial sectors etc., are highly concentrated and control is dominated by some very large companies, the typical characteristics of an oligopolistic market that yield high profits.

Table 2

Summary statistics of Chinese firm’s Market value (Pt), Earnings (Et) and Book Value (Bt) scaled by Book Value (Bt-1) between 2001-6-30 and 2008-12-31

Note: Pi,t is price per share (market value) of equity for firm i at the end of period t; Ei,t is the annualized earnings per share for firm i in period t; Bi,t is book value per share for firm i at the end of period t. Following Bowen (1981), Burgstahler and Dichev (1997) and Bao and Bao (1998), the v本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。