Abstract

http://ssrn.com/abstract=2128827
 
 

References (9)



 


 



Market Declines: What is Accomplished by Banning Short-Selling?


Robert H. Battalio


University of Notre Dame - Department of Finance

Hamid Mehran


Federal Reserve Bank of New York

Paul H. Schultz


University of Notre Dame - Department of Finance

August 1, 2012

Current Issues in Economics and Finance, Vol. 18, No. 5, 2012

Abstract:     
In 2008, U.S. regulators banned the short-selling of financial stocks, fearing that the practice was helping to drive the steep drop in stock prices during the crisis. However, a new look at the effects of such restrictions challenges the notion that short sales exacerbate market downturns in this way. The 2008 ban on short sales failed to slow the decline in the price of financial stocks; in fact, prices fell markedly over the two weeks in which the ban was in effect and stabilized once it was lifted. Similarly, following the downgrade of the U.S. sovereign credit rating in 2011 — another notable period of market stress — stocks subject to short-selling restrictions performed worse than stocks free of such restraints.

Number of Pages in PDF File: 7

Keywords: short selling, down grade

JEL Classification: G12, G14, G18, G01

working papers series





Download This Paper

Date posted: August 14, 2012  

Suggested Citation

Battalio, Robert H. and Mehran, Hamid and Schultz, Paul H., Market Declines: What is Accomplished by Banning Short-Selling? (August 1, 2012). Current Issues in Economics and Finance, Vol. 18, No. 5, 2012. Available at SSRN: http://ssrn.com/abstract=2128827 or http://dx.doi.org/10.2139/ssrn.2128827

Contact Information

Robert H. Battalio
University of Notre Dame - Department of Finance ( email )
P.O. Box 399
Notre Dame, IN 46556-0399
United States
574-631-9428 (Phone)
574-631-5255 (Fax)
Hamid Mehran (Contact Author)
Federal Reserve Bank of New York ( email )
33 Liberty Street
New York, NY 10045
United States
212-720-6215 (Phone)
Paul H. Schultz
University of Notre Dame - Department of Finance ( email )
P.O. Box 399
Notre Dame, IN 46556-0399
United States
219-631-3338 (Phone)
219-631-5255 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 762
Downloads: 186
Download Rank: 95,582
References:  9

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.297 seconds