Government intervention and institutional trading strategy: Evidence from a transition country

Yi Yao, Rong Yang, Zhiyuan Liu and Iftekhar Hasan

Global Finance Journal, 2013, vol. 24, issue 1, 44-68

Abstract: 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 & Kadapakkam, 2006). The findings are important to the current debate regarding the role of government intervention in markets in other transitional economies, as well as in developed countries.

Keywords: Government intervention; Institutional trading strategy (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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Working Paper: Government intervention and institutional trading strategy: Evidence from a transition country (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:24:y:2013:i:1:p:44-68

DOI: 10.1016/j.gfj.2013.03.003

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