Mechanisms of Allocation and Impacts of Abolishment: Evidence from Chinese Stock Quota System

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Thursday, July 30th 1:15-2:30pm EDT

Bohua Duan
Bohua Duan

Bohua Duan is a rising sophomore at Wesleyan University, where he majors in math and economics. Bohua Duan’s research focus is currently on the development of the Chinese financial market, particularly on stock markets. Bohua Duan comes from Beijing, China, where he finished his education before Wesleyan. In free time, he enjoys doing photography and playing soccer.

Abstract: The stock market in China was established in 1990. Then, a “quota system” was implemented from 1992-2002, which allowed the government to centrally allocate shares of IPO to provinces. The allocation of quota was not evenly distributed. We find that before 1996, the allocation of quota was significantly related to the provincial output of state-owned enterprises, and after 1996, the allocation became related to the provincial number of state-owned enterprises and population. The “quota system” was abolished around 2002. We find that IPO probabilities diverged after the abolishment for previously low and high quota provinces.

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Live Poster Session: Zoom Link
Thursday, July 30th 1:15-2:30pm EDT

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