Short on solutions
Will the European ban on short selling do more harm than good?
Regulators in France, Italy, Spain and Belgium have temporarily banned short-selling as they attempt to prevent further falls in European stock markets. But will their actions help to stop share prices tumbling? In this week's Cass Talks, Dr Richard Payne, Reader in Finance at Cass, argues restrictions on short-selling could do more harm than good. Drawing on his research into the 2008 ban in the UK, and other studies from around the world, he insists the restrictions will increase volatility in the markets and make them more costly places to trade. So why have politicians ignored the wide body of evidence? Dr Payne suggests the bans could be an attempt to deflect attention away from political failures to solve deeper economic issues.