Saving China’s Stock Market?

  • Yi Huang
  • Jianjun MiaoEmail author
  • Pengfei Wang
Research Article


We estimate the value creation for the stocks purchased by the Chinese government between the period starting with the market crash in mid-June of 2015 and the market recovery in September. We find that the government intervention increased the value of the rescued non-financial firms by RMB 206 billion after netting out the average purchase cost, which is about 1% of the Chinese GDP in 2014. The short-term value creation came from the increased stock demand, the reduced default probabilities, and the increased liquidity. The intervention may come at a long-run cost of creating moral hazard, preventing price discovery, creating more uncertainty, and damaging government credibility.

JEL Classification

G14 G15 G18 


Supplementary material

41308_2019_79_MOESM1_ESM.xlsx (367 kb)
Supplementary material 1 (xlsx 366 KB)


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Copyright information

© International Monetary Fund 2019

Authors and Affiliations

  1. 1.Graduate Institute, GenevaGenevaSwitzerland
  2. 2.CEPRWashingtonUSA
  3. 3.Department of EconomicsBoston UniversityBostonUSA
  4. 4.ICFS, Southwestern University of Finance and EconomicsChengduChina
  5. 5.CEMA, Central University of Finance and EconomicsBeijingChina
  6. 6.Department of EconomicsThe Hong Kong University of Science and TechnologyClear Water BayHong Kong

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