Does the introduction of market maker improve market quality? Evidence from China's Sci-Tech innovation board

The design of the inherent mechanism of financial markets has always been an important issue in market microstructure. Based on the introduction of the market maker trading system on China's Sci-Tech Innovation Board (STAR Market), this study uses the staggered difference-in-differences method and selects data from STAR Market to test whether the introduction of the market maker system improves market quality. We find that introducing the market maker system improves market quality, with increased liquidity and decreased volatility in STAR Market stocks. Our study has great practical significance for constructing and developing capital market microstructure worldwide, especially in emerging markets.