Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 6, 2019 erstellt
Beschreibung:
We study the impacts of two forms of leveraged trading, namely margin trading and short selling, on the trading liquidity of individual stocks in China. We find that trading liquidity for relevant stocks generally improves after the restriction of leveraged trading was removed. Margin trading and short selling, however, has opposite impacts on liquidity. In ordinary time periods, margin trading benefits liquidity whereas short selling damages liquidity. However, in market downturns, their roles reversed. We also provide evidence suggesting that short sellers are informed traders in China and short selling reduces stock liquidity due to the increased risk of adverse selection faced by uninformed traders