On the Supervision of Capital Market in China from the Perspective of Legal Economics

China's capital market is crucial for the development of state-owned enterprises and the national economy as a whole. Thus to standardize and increase the efficiency of capital operation, it is necessary to carry out effective supervision on the capital market.This paper probes into the issue from the angle of the economic analysis of law and draws the following conclusions. Firstly, the government's supervision should be embodied by institutional norms. Secondly, asymmetric information calls for the government supervision. Thirdly, the external costs should be internalized in legislation to promote the efficiency of capital utilization. Fourthly, the main bodies' behavior in capital market ultimately depends on their own choices.