Short-selling ban and cross-sectoral contagion: evidence from the UK

The UK’s Financial Services Authority (FSA) introduced a ban on the short-selling of specified financial-sector stocks in September 2008. The regulator’s stated objectives were to protect market quality, stabilize the market for financial-sector stocks, and prevent cross-sectoral contagion. We ana...

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Main Authors:	Mohamad, Azhar, Jaafar, Aziz, Goddard, John
Format:	Article
Language:	English English English
Published:	Palgrave MacMillan 2015
Subjects:	HG4501 Stocks, investment, speculation
Online Access:	http://irep.iium.edu.my/46052/ http://irep.iium.edu.my/46052/ http://irep.iium.edu.my/46052/ http://irep.iium.edu.my/46052/1/ShortSellingBanContagion_AOP.pdf http://irep.iium.edu.my/46052/4/ShortSellingBanContagion_JAM.pdf http://irep.iium.edu.my/46052/7/46052_short_selling_ban-Scopus.pdf

id	iium-46052
recordtype	eprints
spelling	iium-460522017-09-20T10:51:55Z http://irep.iium.edu.my/46052/ Short-selling ban and cross-sectoral contagion: evidence from the UK Mohamad, Azhar Jaafar, Aziz Goddard, John HG4501 Stocks, investment, speculation The UK’s Financial Services Authority (FSA) introduced a ban on the short-selling of specified financial-sector stocks in September 2008. The regulator’s stated objectives were to protect market quality, stabilize the market for financial-sector stocks, and prevent cross-sectoral contagion. We analyse the price, market quality and contagion effects following the imposition of the short-selling ban, and its removal in January 2009. We report evidence consistent with a short-lived overpricing (underpricing) effect immediately after the ban was imposed (lifted). There is evidence of deterioration in market quality while the ban was in force. There is evidence of cross-sectoral contagion from the financial sector to the telecommunication sector immediately prior to the imposition of the ban, but there is no contagion for seven other non-financial sectors. There is no evidence of contagion while the ban was in force. In terms of preventing cross-sectoral contagion, the ban may be seen as a successful governance mechanism in the regulator’s toolbox. Palgrave MacMillan 2015-12 Article PeerReviewed application/pdf en http://irep.iium.edu.my/46052/1/ShortSellingBanContagion_AOP.pdf application/pdf en http://irep.iium.edu.my/46052/4/ShortSellingBanContagion_JAM.pdf application/pdf en http://irep.iium.edu.my/46052/7/46052_short_selling_ban-Scopus.pdf Mohamad, Azhar and Jaafar, Aziz and Goddard, John (2015) Short-selling ban and cross-sectoral contagion: evidence from the UK. Journal of Asset Management, 16 (7). pp. 1-18. ISSN 1470-8272 E-ISSN 1479-179X http://www.palgrave-journals.com/jam/index.html 10.1057/jam.2015.32
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English English
topic	HG4501 Stocks, investment, speculation
spellingShingle	HG4501 Stocks, investment, speculation Mohamad, Azhar Jaafar, Aziz Goddard, John Short-selling ban and cross-sectoral contagion: evidence from the UK
description	The UK’s Financial Services Authority (FSA) introduced a ban on the short-selling of specified financial-sector stocks in September 2008. The regulator’s stated objectives were to protect market quality, stabilize the market for financial-sector stocks, and prevent cross-sectoral contagion. We analyse the price, market quality and contagion effects following the imposition of the short-selling ban, and its removal in January 2009. We report evidence consistent with a short-lived overpricing (underpricing) effect immediately after the ban was imposed (lifted). There is evidence of deterioration in market quality while the ban was in force. There is evidence of cross-sectoral contagion from the financial sector to the telecommunication sector immediately prior to the imposition of the ban, but there is no contagion for seven other non-financial sectors. There is no evidence of contagion while the ban was in force. In terms of preventing cross-sectoral contagion, the ban may be seen as a successful governance mechanism in the regulator’s toolbox.
format	Article
author	Mohamad, Azhar Jaafar, Aziz Goddard, John
author_facet	Mohamad, Azhar Jaafar, Aziz Goddard, John
author_sort	Mohamad, Azhar
title	Short-selling ban and cross-sectoral contagion: evidence from the UK
title_short	Short-selling ban and cross-sectoral contagion: evidence from the UK
title_full	Short-selling ban and cross-sectoral contagion: evidence from the UK
title_fullStr	Short-selling ban and cross-sectoral contagion: evidence from the UK
title_full_unstemmed	Short-selling ban and cross-sectoral contagion: evidence from the UK
title_sort	short-selling ban and cross-sectoral contagion: evidence from the uk
publisher	Palgrave MacMillan
publishDate	2015
url	http://irep.iium.edu.my/46052/ http://irep.iium.edu.my/46052/ http://irep.iium.edu.my/46052/ http://irep.iium.edu.my/46052/1/ShortSellingBanContagion_AOP.pdf http://irep.iium.edu.my/46052/4/ShortSellingBanContagion_JAM.pdf http://irep.iium.edu.my/46052/7/46052_short_selling_ban-Scopus.pdf
first_indexed	2023-09-18T21:05:32Z
last_indexed	2023-09-18T21:05:32Z
_version_	1777410907902574592

Short-selling ban and cross-sectoral contagion: evidence from the UK

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