| Summary: | 碩士 === 國立中央大學 === 財務金融學系在職專班 === 103 === Taiwanese stock market experienced a substantial reduction in trading volume in 2008 because of the raveling of financial crisis. To stimulate trading activities, Financial Supervisory Committee (FSC) in Taiwan initiated a number of new regulations, including allowing day trading, allowing margin trade in the bear market, reducing the required margin, expanding the price limit to 10%. It therefore is important to understand the effectiveness of these new regulations. We conduct an event study comparing the stock market activities before and after the implementation of these new regulations. Our results indicate there is a significant increase in turnover rate and volatility after FSC allowed day trading, which advocates the new regulation but also indicates the injected liquidity comes at a price of increased volatility.
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