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

Alessandro Beber () and Marco Pagano

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

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: short selling; ban; crisis; liquidity; price discovery. (search for similar items in EconPapers)
JEL-codes: G01 G12 G14 G18 (search for similar items in EconPapers)
Date: 2009-05-06, Revised 2011-09-03
New Economics Papers: this item is included in nep-mst and nep-reg
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Citations: View citations in EconPapers (14)

Published in the Journal of Finance, 2013, vol. 68, n.1, pp. 343-381.

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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 (2010)
Working Paper: Short-Selling Bans around the World: Evidence from the 2007-09 Crisis (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:241

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