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Regulatory Response to Market Volatility and Manipulation: A Case Study of Mumbai and Karachi Stock Exchanges

Author

Listed:
  • Jamshed Y. Uppal

    () (Department of Business and Economics, Catholic University of America, Washington, D.C.)

  • Inayat U. Mangla

    () (Haworth College of Business, Western Michigan University, Kalamazoo, MI.)

Abstract

This study examines the regulatory intervention in India and Pakistan in response to episodes of excessive market volatility and manipulation and its effectiveness in achieving declared objectives. Our empirical analysis indicates that while the Indian regulatory agencies seem to have achieved their objectives in curtailing manipulative and speculative behavior, there appears to be little impact on such behavior in the case of the Karachi Stock Exchange. Significant differences in the regulatory effectiveness and industry structure may explain the difference in the market behavior outcomes following regulatory interventions. A stronger competitive environment in India, because of the existence of multiple organized exchanges, seems to facilitate effective enforcement of public policy.

Suggested Citation

  • Jamshed Y. Uppal & Inayat U. Mangla, 2006. "Regulatory Response to Market Volatility and Manipulation: A Case Study of Mumbai and Karachi Stock Exchanges," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 11(2), pages 79-105, Jul-Dec.
  • Handle: RePEc:lje:journl:v:11:y:2006:i:2:p:79-105
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    References listed on IDEAS

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    More about this item

    Keywords

    Stock market volatility; manipulation; speculation; scams; corporate governance; regulatory dialectics.;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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