Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/193571
Authors: 
Beber, Alessandro
Fabbri, Daniela
Pagano, Marco
Simonelli, Saverio
Year of Publication: 
2018
Series/Report no.: 
ESRB Working Paper Series 64
Abstract: 
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.
Subjects: 
short-selling
ban
financial crisis
bank stability
systemic risk
JEL: 
G01
G12
G14
G18
Persistent Identifier of the first edition: 
ISBN: 
978-92-95210-00-4
Document Type: 
Working Paper

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