Do foreign institutional investors stabilize the capital market?

Liyan Han, Qingqing Zheng, Lei Li and Libo Yin ()

Economics Letters, 2015, vol. 136, issue C, 73-75

Abstract: This paper examines the impact of financial liberalization on emerging capital market in the context of China. We control for time-invariant firm fixed effects and employ lagged firm size and ownership structure as instrumental variables for the shareholdings of institutional investors. The results indicate that foreign institutional investors reduce volatility and act as market stabilizers. In contrast, domestic institutional investors exacerbate stock market fluctuation.

Keywords: Financial liberalization; Foreign Institutional Investor; Volatility (search for similar items in EconPapers)
JEL-codes: F3 G1 G2 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:136:y:2015:i:c:p:73-75

DOI: 10.1016/j.econlet.2015.09.008

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