Short-Selling Bans around the World: Evidence from the 2007-09 Crisis

Marco Pagano and Alessandro Beber ()

No 7557, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Most stock exchange regulators around the world reacted to the 2007-2009 crisis by imposing bans or regulatory constraints on short-selling. Short-selling restrictions were imposed and lifted at different dates in different countries, often applied to different sets of stocks and featured different degrees of stringency. We exploit this considerable variation in short-sales regimes to identify their effects with panel data techniques, and find that bans (i) were detrimental for liquidity, especially for stocks with small market capitalization, high volatility and no listed options; (ii) slowed down price discovery, especially in bear market phases, and (iii) failed to support stock prices, except possibly for U.S. financial stocks.

Keywords: Ban; Crisis; Liquidity; Price discovery; Short selling (search for similar items in EconPapers)
JEL-codes: G01 G12 G14 G18 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-mst
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Citations: View citations in EconPapers (25)

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Related works:
Journal Article: Short-Selling Bans Around the World: Evidence from the 2007–09 Crisis (2013)
Working Paper: Short-Selling Bans around the World: Evidence from the 2007-09 Crisis (2011)
Working Paper: Short-Selling Bans around the World: Evidence from the 2007-09 Crisis (2010)
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