This article studies the institutional creation of Chinese stock exchanges and their regulations. It argues that institution creation was largely a function of market forces,local initiatives, path-dependence,and a learning curve. What characterized this institutional transformation was a process in which the central government was first led by various market forces fueled by local political and economic initiatives,then was forced to react by legislating various administrative ordinances to suppress the chaotic and lawless market,and finally resorted to creating a centralized regulatory institution to rein in the fledging stock market.

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