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Volkswirtschaftliche Diskussionsbeiträge, Universität Kassel >
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http://hdl.handle.net/10419/32146
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| Title: | | Big elephants in small ponds: do large traders make financial markets more aggressive?  |
| Authors: | | Bannier, Christina E. |
| Issue Date: | | 2004 |
| Series/Report no.: | | Volkswirtschaftliche Diskussionsbeiträge 77 |
| Abstract: | | Market participants often suspect that large traders have a disproportionate effect on financial markets, increasing the aggressiveness of market responses. Prior studies have shown that the impact of a large trader on a currency crisis depends positively on his size and informational position. By contrast, this article highlights the role that market sentiment has on the impact of a large trader. If the market believes that fundamentals are weak, then the probability of a crisis depends positively on the trader's size but negatively on the precision of his information, with these effects reversed in a generally optimistic market. A large player, therefore, need not make market responses more aggressive. |
| Subjects: | | currency crises large traders market sentiment coordination private and public information |
| JEL: | | F31 D82 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Volkswirtschaftliche Diskussionsbeiträge, Universität Kassel
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