Saving China’s Stock Market?
We estimate the value creation for the stocks purchased by the Chinese government between the period starting with the market crash in mid-June of 2015 and the market recovery in September. We find that the government intervention increased the value of the rescued non-financial firms by RMB 206 bil...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Palgrave Macmillan Ltd.
2019
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| Online Access: | View Fulltext in Publisher |
| LEADER | 01211nam a2200157Ia 4500 | ||
|---|---|---|---|
| 001 | 10.1057-s41308-019-00079-z | ||
| 008 | 220511s2019 CNT 000 0 und d | ||
| 020 | |a 20414161 (ISSN) | ||
| 245 | 1 | 0 | |a Saving China’s Stock Market? |
| 260 | 0 | |b Palgrave Macmillan Ltd. |c 2019 | |
| 856 | |z View Fulltext in Publisher |u https://doi.org/10.1057/s41308-019-00079-z | ||
| 520 | 3 | |a We estimate the value creation for the stocks purchased by the Chinese government between the period starting with the market crash in mid-June of 2015 and the market recovery in September. We find that the government intervention increased the value of the rescued non-financial firms by RMB 206 billion after netting out the average purchase cost, which is about 1% of the Chinese GDP in 2014. The short-term value creation came from the increased stock demand, the reduced default probabilities, and the increased liquidity. The intervention may come at a long-run cost of creating moral hazard, preventing price discovery, creating more uncertainty, and damaging government credibility. © 2019, International Monetary Fund. | |
| 700 | 1 | |a Huang, Y. |e author | |
| 700 | 1 | |a Miao, J. |e author | |
| 700 | 1 | |a Wang, P. |e author | |
| 773 | |t IMF Economic Review | ||