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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| Format: | Article |
| Language: | English English English |
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Palgrave MacMillan
2015
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| Online Access: | 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 |
| _version_ | 1848782895355789312 |
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| author | Mohamad, Azhar Jaafar, Aziz Goddard, John |
| author_facet | Mohamad, Azhar Jaafar, Aziz Goddard, John |
| author_sort | Mohamad, Azhar |
| building | IIUM Repository |
| collection | Online Access |
| 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. |
| first_indexed | 2025-11-14T16:12:43Z |
| format | Article |
| id | iium-46052 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English English English |
| last_indexed | 2025-11-14T16:12:43Z |
| publishDate | 2015 |
| publisher | Palgrave MacMillan |
| recordtype | eprints |
| repository_type | Digital Repository |
| 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 |
| spellingShingle | HG4501 Stocks, investment, speculation Mohamad, Azhar Jaafar, Aziz Goddard, John Short-selling ban and cross-sectoral contagion: evidence from the UK |
| title | 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_short | Short-selling ban and cross-sectoral contagion: evidence from the UK |
| title_sort | short-selling ban and cross-sectoral contagion: evidence from the uk |
| topic | HG4501 Stocks, investment, speculation |
| 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 |