Author(s)

Yanyan Li, Jiahua Li

Corresponding Author

Yanyan Li,

ABSTRACT

China launched a pilot scheme in March 2010 to lift the ban on short-selling and margin-trading for stocks on a designated list. The number of list is up to nearly one thousand. We find that during the experiment period, the margin-trading and short-selling system has improved the ability of individual stocks in reflecting their own special information, but it rarely played an ideal role in promoting stocks to absorb market information. In general, the policy of margin financing and short selling has limited effect on the improvement of stock pricing efficiency.

KEYWORDS

Margin-trading, short-selling, stock pricing efficiency, market information