ABSTRACT
Between the open-door policy of economic reforms in 1978 and the Asian financial crisis, China experienced a remarkable annual economic growth of up to 8 percent per year. The Chinese stock market has attracted extensive research interest in recent years for two reasons. First, more and more Chinese companies have listed on stock exchanges to raise capital for financing their growth (Mok and Hui 1998; Su and Fleisher 1999). Stock market capitalization was about 22 percent of GDP in 1997 and 26 percent in 1998 (Fung and Leung 2001), and market capitalization as of April 2000 was more than 4 percent of the 1999 GDP (see Table 6.1). Such tremendous growth in the Chinese equity market is impressive; its stock market has achieved a size comparable to that of some industrialized countries.
