Rule improvements and irrational characteristics of herd behaviour-The effects of SMT policy

As a large emerging capital market, China is gradually improving its trading systems. This study examines the causal effects of China's securities margin trading policy and finds that rule improvements significantly inhibit institutional buying and selling herding behaviour. This policy inhibits the behaviour of institutional herding that does not sufficiently assess fundamentals of listed companies or pay sufficient attention to market information. Influenced herd behaviour is not consistent the pursuit of value but are irrational characteristics. The policy effects are differentiated and effective. This study also provides a reference for other emerging capital markets to improve their systems.