1. Why Do US Banks React Differently to Short Selling Bans?
- Author
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Viktoriia Paimanova, Giuseppe Galloppo, Mauro Aliano, Daniele Angelo Previati, Previati, Daniele Angelo, Chesini, Giusy, Giaretta, Elisa, Paltrinieri, Andrea, Galloppo, Giuseppe, Aliano, Mauro, and Paimanova, Viktoriia
- Subjects
financial crises ,Present value ,Short-selling ban ,stock market reaction ,systematic risk ,Monetary economics ,SH1_7 ,NO ,Probability of default ,Commerce ,Financial crisis ,Systematic risk ,Policy intervention ,Business ,Volatility (finance) ,Price reduction ,Stock (geology) - Abstract
Financial crisis brought significant decreases in market indices, led to active selling of stocks, and raised the possibility of a total collapse. Short selling ban was expected to bring lower stock price volatility and raise investor’s confidence. In this context, a policy intervention can change the net expected present value of an individual bank, basically because such kind of interventions aims to reduce the speculative selling pressure on a single title stock, according to policy regulators. Consequently, it should calm down the price reduction and net expected present value of every single stock. Second, the intervention may reduce both volatility and probability of default of financial companies.
- Published
- 2017