Government intervention and institutional trading strategy : Evidence from a transition country
Yao, Yi; Yang, Rong; Liu, Zhiyuan; Hasan, Iftekhar (28.04.2012)
Numero
9/2012Julkaisija
Bank of Finland
2012
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-201408072063Tiivistelmä
This study investigates the effectiveness of government intervention in rescuing bearish markets in a transition economy. Focusing on a pre- and a post-intervention period, the findings reveal that government intervention successfully rescued bearish markets in China and led to a fundamental change in institutional trading strategy after the intervention. We observe that following an intervention, institutions are more sensitive to long-term stock market regulations, whereas individual investors are more concerned about the rules related to their short-term interests. Evidence suggests that a credible signal from the government can be helpful in creating a positive outcome in the market (Bhanot and Kadapakkam, 2006). The findings are important to the current debate regarding the role of govern-ment intervention in markets in other transitional economies, as well as in developed countries. Keywords: Government Intervention; Institutional Trading Strategy. JEL Codes: G15, G18, G32
Julkaisuhuomautus
Published in Global Finance Journal, Volume 24, Issue 1, 2013, Pages 44-68