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Impact of Financial Liberalisation on Stock Market Liquidity: Experience of China

SSRN Electronic Journal
2009
  • 4
    Citations
  • 2,164
    Usage
  • 1
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    4
    • Citation Indexes
      4
  • Usage
    2,164
    • Abstract Views
      1,755
    • Downloads
      409
  • Captures
    1
    • Readers
      1
      • SSRN
        1
  • Ratings
    • Download Rank
      145,023

Article Description

This paper assesses the impact of the recent financial reforms in China. Following the country's accession to the World Trade Organization, financial liberalisation has picked up considerable momentum. Measures introduced encompass deregulation in the banking sector and refinements in various financial markets, as well as allowing more freedom for Chinese and foreign investors to participate and interact domestically and overseas. Compared to other studies on financial liberalisation, this study focuses on a relatively narrower aspect of financial reforms namely, the impact on stock market liquidity. Using a panel data set drawn from the Shanghai stock market, we find a positive and significant liquidity impact associated with the recent round of measures, which reflects not only an improvement in capital allocation efficiency in China's equity market but, from a financial stability point of view, also a reduction in its vulnerability. The finding also provides evidence on one of the important channels in which financial liberalisation can be transformed into economic growth over time.

Bibliographic Details

Jess Lee; Alfred Wong

Elsevier BV

Financial liberalisation; liquidity; dual-listed stocks; stock exchanges; fixed-effect panel regression

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