Margin Purchases and Short Sales in Emerging Markets: Their Rationales and Design Variables

Endo, Tadashi; Ree, S Ghon

doi:10.2139/ssrn.1327309

Cited by 12 publications

(9 citation statements)

References 71 publications

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“…In the robustness test, however, we bring them back in to investigate the speed of price adjustment with and without financial derivatives written. The quarterly D-list announcements, daily short interest data, transaction data, and the bid-and-ask price data Endo and Rhee (2006) provide a good summary of institutional aspects of margin transactions (margin purchases and short sales) in emerging markets. 5 In a ''naked" short sale, the seller does not arrange to borrow the securities in time to make delivery to the buyer within the standard settlement period.…”

Section: Data Descriptionmentioning

confidence: 99%

Short sales and speed of price adjustment: Evidence from the Hong Kong stock market

Chen

Rhee

2010

Journal of Banking & Finance

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Section: Data Descriptionmentioning

confidence: 99%

Short sales and speed of price adjustment: Evidence from the Hong Kong stock market

Chen

Rhee

2010

Journal of Banking & Finance

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“…The potential of short selling as a source for market liquidity is highlighted in previous research (Arturo et al, 2007;Endo and Rhee, 2006;Fabozzi and Asness, 2004). The lack of liquidity in the market is usually attributed to the low demands for the securities, high transaction costs, inefficient market microstructures, limited supply of securities, low levels of confidence in the market due to weak regulations and the lack of appropriate corporate governance (Fabozzi and Asness, 2004).…”

Section: The Significance Of Short Selling In Emerging Marketsmentioning

confidence: 87%

Identifying Islamic alternatives to short selling in Iranian stock market and prioritizing them using TOPSIS

Ahmadvand

Dezfuli

Sadehvand³

2015

Qualitative Research in Financial Markets

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Purpose – This paper aims to first explain short selling and its benefits and damages; then, using experts’ opinions and Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method as well as based on the legal, financial and jurisprudential criteria adopted, evaluate and prioritize Islamic alternatives to short selling; and finally, introduce the most proper approach for implementing it in Iran’s stock market. Design/methodology/approach – The methods applied in the paper are as follows: Library method to collect the required data for developing the theoretical and jurisprudential foundations of the study, identifying the appropriate criteria for prioritizing; the alternative methods for short selling in the Islamic markets; and the field method to determine the level of significance of the ranking criteria and prioritize the alternative methods for short selling in the Islamic markets on the basis of such criteria. The alternative methods for short selling in Iranian stock market were identified and analyzed jurisprudentially and legally. Afterwards, these strategies were prioritized based on the (legislative, financial and jurisprudential) criteria which were adopted in the form of Delphi from the related literature, research and expert opinions by means of TOPSIS approach. The method with the highest ranking will be introduced as the alternative method for short selling. Findings – The paper suggests that among all Islamic alternatives to short selling, based on experts’ opinions and legal considerations, method of combining Murabaha and Wa’ad is the most proper strategy in Iranian stock market. Research limitations/implications – An important limitation we faced in this study was limited familiarity of Iran, capital market participants with Islamic finance concepts including Islamic alternatives to short selling. Therefore, designed questionnaire was sent only to participants who had experience in the field of Islamic finance that they were not more than 31 people. Of course, in this study, large sample size was not necessary because the questionnaire was completed by experts, and therefore, results were scientific and reliable. Originality/value – One of the transaction strategies which significantly contributes to the enhancement of market liquidity is short selling. However, this strategy is not applicable to the Islamic stock markets because of its contradictions with a number of Islamic laws. Therefore, Islamic financial researchers have attempted to design relevant legal mechanisms drawing on the Islamic contracts to make use of the merits of this transaction strategy. In addition to introducing short selling and its demerits for the stock market, the paper explored the alternative methods and proposed the most proper one for implementing in Iranian stock market.

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“…al. (2007) ranged between 2.5 percent in 2003 to 4 percent in 2006, and it is thought to be higher in other markets (Endo and Ree (2006)). We assume that U.S. holdings of equities in the U.K. are overstated by 4 percent and holdings overstated by 5 percent in other countries that allow shortselling; the resulting position adjustment is shown in the final line of Appendix Table D.1.…”

Section: Banking and Nonbanking Assetsmentioning

confidence: 96%

“…In most emerging market countries, market development lags developed economies and short sales of securities are generally prohibited or the required infrastructure for borrowing securities does not exist. Table 7 in Endo and Ree (2006) provides a list of countries that allow short-selling and in which short-sales are practiced. For these countries, we take U.S. holdings of those countries' equities from Au et.…”

Section: Banking and Nonbanking Assetsmentioning

confidence: 99%

Current Account Sustainability and Relative Reliability

Curcuru

Thomas

Warnock

2008

internationalfinance

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The sustainability of the large and persistent U.S. current account deficits is one of the biggest issues currently being confronted by international macroeconomists. Some very plausible theories suggest that the substantial global imbalances can continue in a benign manner, other equally plausible theories predict a disorderly resolution, and in general it is very difficult to discern between competing theories. To inform the debates, we view competing theories through the perspective of the relative reliability of the data the theories rely on. Our analysis of the dark matter theory is cursory; from a relative reliability perspective, it fails as it is built on the assumption that an item that is largely unmeasured is the most accurate component of the entire set of international accounts. Similarly, the best data currently available suggest that U.S. returns differentials are much smaller than implied by the exorbitant privilege theory. Our analysis opens up questions about potential inconsistencies in the international accounts, which we address by providing rough estimates of various holes in the accounts.

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Margin Purchases and Short Sales in Emerging Markets: Their Rationales and Design Variables

Cited by 12 publications

References 71 publications

Short sales and speed of price adjustment: Evidence from the Hong Kong stock market

Short sales and speed of price adjustment: Evidence from the Hong Kong stock market

Identifying Islamic alternatives to short selling in Iranian stock market and prioritizing them using TOPSIS

Current Account Sustainability and Relative Reliability

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