Comment: Short-selling ban will increase risk of recession
The introduction of a ban on short-selling by several European countries will increase the risk of a full-blown recession, says Andrew Shrimpton of Kinetic Partners…
The banning by France, Italy, Belgium and Spain of the short-selling of financial stocks for at least 15 days with effect from today will only reduce price volatility for a few days at best. As demonstrated in 2008, when similar bans were in place, volatility increases after a day or so because liquidity in the stocks is significantly reduced. This measure will reduce the ability for banks to raise capital and increase the risk of a full blown recession in the countries that have adopted the ban.
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