THE INTENDED AND COLLATERAL EFFECTS OF SHORT-SALE BANS AS A REGULATORY TOOL

Terrence Hendershott, Ethan Namvar and Blake Phillips

Short-sale bans have been utilized globally as a regulatory tool during periods of financial crisis. This paper reviews the observed intended and unintended effects of short-sale bans. Research has documented pervasive effects spanning many financial markets that include options, convertible bonds, credit default swaps, and exchange-traded funds. Such implications should be of interest to regulators and policymakers when contemplating future bans.