Insider trading on Ottoman sovereign default: The Ottoman General Debt Bond at European and İstanbul financial markets

Avni Önder Hanedar, Elmas Yaldız Hanedar and Mehmet Göktan

Finance Research Letters, 2022, vol. 47, issue PB

Abstract: Using efficient market hypothesis and structural break frameworks, this paper examines insider trading during the Ottoman sovereign default, as historical narratives claim information leakage. If the narratives were true, informed traders would sell the Ottoman government's bonds to avoid excessive losses before the default, creating a negative price shock in case of market inefficiency. This paper employs the Ottoman General Debt Bond prices in İstanbul, London, and Paris compiled from Ottoman and European newspapers. The results do not confirm price shocks just before the sovereign default announcement. Thus, investors seem to have anticipated the default before its official declaration.

Keywords: Ottoman empire; Sovereign default; Structural break; Sovereign bond; Insider trading; Efficient market (search for similar items in EconPapers)
JEL-codes: D84 G14 N23 N73 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000836

DOI: 10.1016/j.frl.2022.102767

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