We provide direct evidence of leverage-induced fire sales contributing to a market crash using
account-level trading data for brokerage- and shadow-financed margin accounts during the
Chinese stock market crash of 2015. Margin investors heavily sell their holdings when their
account-level leverage edges toward their maximum leverage limits, controlling for stock-date
and account fixed effects. Stocks that are disproportionately held by accounts close to leverage
limits experience high selling pressure and abnormal price declines which subsequently reverse.
Unregulated shadow-financed margin accounts, facilitated by FinTech lending platforms,
contributed more to the crash despite their smaller asset holdings relative to regulated brokerage