INSIGHTS: The Intended and Collateral Effects of Short Sale Bans as a Regulatory Tool

Terrence Hendershott, Ethan Namvar and Blake Phillips

Volume 11, Number 3, Third Quarter 2013

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.