Is pledge risk matched between pledgees and pledgers in China’s share pledge market?

Based on a sample of share pledging by the controlling shareholders of A-share listed firms, we investigate whether pledge risk is matched between pledgees and pledgers in China’s share pledge market. The results show that, compared with broker pledgees, commercial bank pledgees accept pledged stock...

Descripción completa

Guardado en:
Detalles Bibliográficos
Autores principales: Deren Xie, Mengyu Zhang
Formato: article
Lenguaje:EN
Publicado: Elsevier 2021
Materias:
Acceso en línea:https://doaj.org/article/2a962355a6e2431cace172daada2d7ea
Etiquetas: Agregar Etiqueta
Sin Etiquetas, Sea el primero en etiquetar este registro!
Descripción
Sumario:Based on a sample of share pledging by the controlling shareholders of A-share listed firms, we investigate whether pledge risk is matched between pledgees and pledgers in China’s share pledge market. The results show that, compared with broker pledgees, commercial bank pledgees accept pledged stocks with lower market risk and the corresponding listed firms are at lower risk, have higher levels of information transparency and are more likely to be state-owned enterprises (SOEs). We also find that commercial bank pledgees do not ease the risk requirement of pledged stocks for pledgers of SOEs. Further, we document that commercial bank pledgees face lower margin call risks than broker pledgees. After securities companies were authorized to compete in the share pledge market in 2013, the pledge risk faced by commercial bank pledgees further reduced. Our results support that China’s share pledge financing market generally achieves an efficient equilibrium in terms of pledge risk matching between pledgees and pledgers. We recommend that the macro control of share pledge risk be focused on broker pledgees.