 Can direct government intervention save the stock market?Tien-Trung Nguyen, Yang-Che Wu, Mei-Chu Ke and Tung Liang Liao The Quarterly Review of Economics and Finance, 2022, vol. 84, issue C, 271-284 Abstract: With the aim of restoring the investors’ confidence during the 2008 Global Financial Crisis, the Taiwan government bought 47 blue-chip stocks in the Taiwan Stock Exchange. Our study examines the effect of the government intervention across four periods, including the pre-event, event, holding, and selling periods, the first exploring the stock price behavior during the holding period in the literature. During the holding period, the cumulative average daily abnormal returns (CAAR) curves of the intervened stocks sharply rise while its market volatility begins to decrease. Next, the intervention effect does spread to the non-intervened stocks, and the shareholders of the non-intervened stocks do benefit almost as much as those of the intervened stocks. The policy implications of our results are that the government can save the stock market by setting the holding period in its measures and by concentrating on purchasing a limited number of blue-chip stocks. Keywords: Government intervention; Event study; Volatility; Spillover effect; Cointegration (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:84:y:2022:i:c:p:271-284 DOI: 10.1016/j.qref.2022.02.001 Access Statistics for this article The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty More articles in The Quarterly Review of Economics and Finance from Elsevier |
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