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The Relevance of Short Sales to the Maltese Stock Market

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Author Info

  • Paul V. Azzopardi

    (Azzopardi Investment Management Ltd.)

  • Silvio John Camilleri

    (Banking & Finance Dept., FEMA, University of Malta)

Abstract

The paper discusses the possible effects of short sales on the operation of a very small stock market such as the Maltese one. After studying the basic mechanics of short selling procedures, the paper reviews the salient literature with particular reference to how short sales may enhance informational efficiency and their relationship with liquidity. The paper proceeds by examining these relationships in the context of the Maltese securities market. The study reveals that short sales may be desirable on the Maltese stock market for enhancing price efficiency and liquidity, yet a more formal framework for conducting such transactions is required. In addition, short positions may be particularly risky in the context of the Maltese stock market, due to low liquidity levels.

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File URL: http://128.118.178.162/eps/fin/papers/0409/0409009.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Finance with number 0409009.

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Length: 17 pages
Date of creation: 07 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpfi:0409009

Note: Type of Document - pdf; pages: 17
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Web page: http://128.118.178.162

Related research

Keywords: Short Sales; Malta Stock Exchange; Liquidity;

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References

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  1. Diamond, Douglas W. & Verrecchia, Robert E., 1987. "Constraints on short-selling and asset price adjustment to private information," Journal of Financial Economics, Elsevier, vol. 18(2), pages 277-311, June.
  2. Bhattacharya, Anand K & Gallinger, George W, 1991. "Causality Tests of Short Sales on the New York Stock Exchange," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 14(3), pages 277-86, Fall.
  3. Said Elfakhani, 2000. "Short positions, size effect, and the liquidity hypothesis: implications for stock performance," Applied Financial Economics, Taylor & Francis Journals, vol. 10(1), pages 105-116.
  4. Figlewski, Stephen & Webb, Gwendolyn P, 1993. " Options, Short Sales, and Market Completeness," Journal of Finance, American Finance Association, vol. 48(2), pages 761-77, June.
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Cited by:
  1. Silvio John Camilleri, 2005. "Can a Stock Index be Less Efficient than Underlying Shares? An Analysis Using Malta Stock Exchange Data," Finance 0507006, EconWPA.

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