Research on the Conducting Effect of Monetary Policy on Stock Market Based on Investor Sentiment

Abstract—The research of stock market plays an important role in capital market and risk control. For the significant impact on the stock market, this paper studies the effect of monetary policy on the stock market as well as the effect of investor sentiment on the conducting effect of monetary policy by establishing VAR model. This paper also analyses the influence of monetary policy and investor sentiment on stock price in stages by combining specific events in the sample interval and using the structural mutation model. The study reveals that investor sentiment will greatly impact on the transmission of monetary policy, And with a relatively small influence, the impact of monetary policy on the stock market is not always present.