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The hybrid regulatory regime in turbulent times: The role of the state in China's stock market crisis in 2015–2016

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  • Chen Li
  • Huanhuan Zheng
  • Yunbo Liu

Abstract

The hybridization of socialist state control with increasingly complex financial markets has generated unusual features in China's financial regulatory regime. Using the 2015–2016 stock market crisis as a case study, this article draws on the Legal Theory of Finance (LTF) to analyze the state‐market interface and crisis governance in China's stock market. It illustrates the shift of China's stock market governance away from traditional administrative hierarchies to more plural and hybrid forms of ownership, control, and regulatory governance. By examining the policy process, market dynamics, and crisis management in the evolution of China's 2015–2016 stock market crashes, it identifies the endogenous dilemmas of regulatory elasticity and campaign‐style enforcement in China's hybrid regulatory regime, which have amplified policy noises and led to a destabilizing feedback loop between policy‐induced market turbulence and market‐induced organizational turbulence inside the regulatory bureaucracy.

Suggested Citation

  • Chen Li & Huanhuan Zheng & Yunbo Liu, 2022. "The hybrid regulatory regime in turbulent times: The role of the state in China's stock market crisis in 2015–2016," Regulation & Governance, John Wiley & Sons, vol. 16(2), pages 392-408, April.
    • Handle: RePEc:wly:reggov:v:16:y:2022:i:2:p:392-408
    DOI: 10.1111/rego.12340
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    References listed on IDEAS

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    2. Armour, John & Awrey, Dan & Davies, Paul & Enriques, Luca & Gordon, Jeffrey N. & Mayer, Colin & Payne, Jennifer, 2016. "Principles of Financial Regulation," OUP Catalogue, Oxford University Press, number 9780198786474, Decembrie.
    3. Stiglitz, Joseph E., 2000. "Capital Market Liberalization, Economic Growth, and Instability," World Development, Elsevier, vol. 28(6), pages 1075-1086, June.
    4. Stephen Bell & Hui Feng, 2009. "Reforming China's Stock Market: Institutional Change Chinese Style," Political Studies, Political Studies Association, vol. 57(1), pages 117-140, March.
    5. Stephen Bell & Hui Feng, 2009. "Reforming China's Stock Market: Institutional Change Chinese Style," Political Studies, Political Studies Association, vol. 57, pages 117-140, March.
    6. Victor Nee & Sonja Opper, 2009. "Bureaucracy and Financial Markets," Kyklos, Wiley Blackwell, vol. 62(2), pages 293-315, April.
    7. Pistor, Katharina, 2013. "A legal theory of finance," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 315-330.
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    Cited by:

    1. Zhang, Teng & Li, Jiaqi & Xu, Zhiwei, 2024. "Speculative trading, stock returns and asset pricing anomalies," Emerging Markets Review, Elsevier, vol. 61(C).

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