Are short-sales constraints binding when there is a centralized lendable securities market? Evidence from Japan

Mostafa Saidur Rahim Khan, Marc Bremer and Hideaki Kiyoshi Kato

Journal of the Japanese and International Economies, 2018, vol. 48, issue C, 85-96

Abstract: This study examines the significance of short-sales constraints in the presence of a centralized lendable securities market in Japan. We find evidence that a centralized lendable securities market experiences lower short sales constraints. The cost of borrowing stock is found to be lower in Japan's centralized lendable securities market compared with a non-centralized lendable securities market. We also find evidence that recall risk is lower in a centralized lendable securities market. Additionally, there is evidence that stocks are not systematically overvalued in the presence of the centralized lendable securities market. These results are robust when alternative measures of short-sales constraints are considered.

Keywords: Short-sales; Centralized securities lending; Recall risk; Overvaluation; Pricing (search for similar items in EconPapers)
JEL-codes: G14 G17 M4 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:48:y:2018:i:c:p:85-96

DOI: 10.1016/j.jjie.2017.11.003

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