Are Short-Selling Bans Effective? Evidence from the Summer 2011 European Bans on Net Short Sales

Ramona Dagostino ()
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Ramona Dagostino: Milan University 'Luigi Bocconi'

Rivista di Politica Economica, 2013, issue 4, 47-77

Abstract: During the Summer of 2011, securities regulators in France,Italy and Spain reintroduced a ban on short sales. This ban differed from previous restrictions: it was the first time regulators prohibited net short sales on selected financial stocks, and extended the ban widely to include synthetic short positions.The nature of the ban allows me to employ a unique identification strategy that overcomes endogeneity problems discussed in past literature. Results indicate that the ban is associated with a significant deterioration in market quality – particularly for high free-float stocks – in contrast, I do not find any effect on stock price performance

Keywords: short selling; regulation; ban; liquidity (search for similar items in EconPapers)
JEL-codes: G01 G12 G14 G18 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:rpo:ripoec:y:2013:i:4:p:47-77

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