Short-Selling Bans and Bank Stability
Marco Pagano () and
Additional contact information
Alessandro Beber: Cass Business Schooland CEPR
Daniela Fabbri: Cass Business School
CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy
In both the subprime crisis and the euro-area crisis, regulators imposed bans on short sales, aimed mainly 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, and these 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 of similar size and riskiness, and instrument the 2011 ban decisions with regulators’ propensity to impose a ban in the 2008 crisis.
Keywords: short selling; ban; financial crisis; bank stability; systemic risk (search for similar items in EconPapers)
JEL-codes: G01 G12 G14 G18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-eec
Date: 2015-12-31, Revised 2017-12-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
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)
Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:423
Access Statistics for this paper
More papers in CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy Contact information at EDIRC.
Bibliographic data for series maintained by Lia Ambrosio ().