| Summary: | 碩士 === 中興大學 === 財務金融系所 === 95 === Through 2001 to 2005, Chinese government implements three important stock market liberalization policies: opening of B shares, opening of A shares and transferring non-tradable shares to be tradable, to reduce the market segmentation and inefficiency. This article is going to examine that if the segmentation phenomenon is weakened and if enterprises receive lower cost of capital after these reforms. I use Johansen Co-integration Test and Error Correction Model to find the co-integration between markets, and then adopt the model analyzed by Stulz (1995) to examine the degree of market segmentations and cost of capital. I find that the market segmentations decrease after every reform and Chinese stock market has long-term relationships with the world stock market and between internal A&B share markets. But only two reforms: opening B shares and non-tradable shares reform, lead the cost of capital to fall, opening A shares does not seem to bring economic benefits. I hope this research can provide suggestions and information to the policymakers in China or other countries, particularly those in transition economies, who may be considering whether or not or how to employ similar reform policies.
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