Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156125
Authors: 
Huang, Yi
Miao, Jianjun
Wang, Pengfei
Year of Publication: 
2016
Series/Report no.: 
Graduate Institute of International and Development Studies Working Paper 09-2016
Abstract: 
What were the economic benefits and costs of preventing a stock market meltdown during the summer of 2015 by the Chinese government intervention? We answer this question by estimating the value creation for the stocks purchased by the government between the period starting with the market crash in mid-June and the market recovery in September. We find that the government intervention increased the value of the rescued firms with a net benefit between RMB 5,697 and 6,635 billion, which is about 10% of the Chinese GDP in 2014. The value creation came from the increased stock demand by the government, the reduced default probabilities, and the increased liquidity.
Subjects: 
China
stock market crash
government intervention
JEL: 
G14
G15
G18
Document Type: 
Working Paper

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