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China's National Team: A Game Changer in Stock Market Stabilization?

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  • Li, Hui
  • Liu, Kerry

Abstract

This study investigates the influence of China's national team investors on stock market volatility and crash risks using 2011-2018 data. Findings show increased stock return volatility and decreased crash risks post-2015. The national team reduced risk for pledged shares, while treatment firms reduced R&D investment and diversified business more than control groups. A difference-in-difference approach reveals heightened volatility in firms with national team ownership after 2015, questioning the efficacy of these interventions. This research offers insights into government intervention in financial markets, emphasizing the national team's impact on market stability and economic outcomes.

Suggested Citation

  • Li, Hui & Liu, Kerry, 2024. "China's National Team: A Game Changer in Stock Market Stabilization?," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s154461232400014x
    DOI: 10.1016/j.frl.2024.104984
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    More about this item

    Keywords

    National Team Investor; Institutional Investor; Volatility; Crash Risk;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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