Is the Provincial Capital Market Segmented in China?

Abstract This paper evaluates the degree of provincial capital mobility in C hina since 1978 by estimating the saving‐retention rate in the Feldstein and Horioka framework. It is found that the estimate of the saving retention rate tends to be biased downward if we fail to decompose the investment and saving rates into the private and government components. After the decomposition, we find that the private capital mobility was low prior to the …