Short-Selling Bans and Bank Stability

Alessandro Beber, Daniela Fabbri, Marco Pagano and Saverio Simonelli

The Review of Corporate Finance Studies, 2021, vol. 10, issue 1, 158-187

Abstract: In both the subprime crisis and the eurozone crisis, regulators imposed bans on short sales mainly aimed at preventing stock price turbulence from destabilizing financial institutions. Contrary to the regulators’ intentions, financial institutions whose stocks were banned experienced greater increases in the probability of default and volatility than unbanned ones. Increases were larger for more vulnerable financial institutions. To take into account the endogeneity of short sales bans, we match banned financial institutions with unbanned ones with similar sizes and levels of riskiness and instrument the 2011 ban decisions with regulators’ propensity to impose a ban in the 2008 crisis. (JEL G01, G12, G14, G18)Received July 8, 2020; editorial decision September 8, 2020 by Editor Isil Erel.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://hdl.handle.net/10.1093/rcfs/cfaa022 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Short-Selling Bans and Bank Stability (2020)
Working Paper: Short-selling bans and bank stability (2018)
Working Paper: Short-Selling Bans and Bank Stability (2017)
Working Paper: Short-Selling Bans and Bank Stability (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:rcorpf:v:10:y:2021:i:1:p:158-187.

Access Statistics for this article

The Review of Corporate Finance Studies is currently edited by Andrew Ellul

More articles in The Review of Corporate Finance Studies from Society for Financial Studies
Bibliographic data for series maintained by Oxford University Press ().