AN ANALYSIS OF SHORT SELLING’S ROLE IN THE RECENT FINANCIAL CRISIS AND THE EFFECTIVENESS OF SHORT SELLING RESTRICTIONS

Open Access
Author:
Scialabba, Richard Mauro
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Timothy T Simin, Thesis Supervisor
  • James Alan Miles, Honors Advisor
Keywords:
  • short selling
  • short sellign restrictions
  • financial crisis
  • event study
  • abnormal returns
  • change in betas
Abstract:
This paper goes into depth regarding short selling, short selling restrictions and the most recent financial crisis. Through statistical tests and analyses, I set out to illustrate how short selling impacted the market during the crisis, as well as, the effect of short selling restrictions on financial stock characteristics like return, volume and volatility. The paper will begin with an explanation of short selling and some background to the financial crisis. It will be followed by data selection and analysis and will end with conclusions brought about by the statistical tests. I will tailor my report for those who have a minimal finance background, hoping to educate the average investor, so they, too, will be able to form a well-versed opinion of short selling.