Global Financial Crisis
Short-selling Bans and Institutional Investors' Herding Behaviour: Evidence from the Global Financial Crisis
The authors examine bans on selected financial stocks in six countries during the 2008-2009 global financial crisis, which provided a setting to analyze the impact of short-sale restrictions. In particular, the authors focussed on short-sale constraints’ effect on institutional investors’ trading behaviour and the possibility of generating herding behaviour. They conclude that the empirical evidence shows that short-selling restrictions exhibit either no influence on herding formation or induce adverse herding.
"It's also very clear that central banks cannot be expected to provide the engine for growth indefinitely," says Director of CIGI's Global Economy Program, commenting on the G7 finance ministers summit in London.
The news from Europe is scarcely getting better. Germany and the rest of the EU are locked in a battle about how to introduce a banking union and mechanisms not only to end ‘too big to fail’ but also to provide funds for future bailouts, if necessary. Indeed, in an about face, we have moved from relying on bailouts to deal with financial crises to bail-ins. The recent Cyprus episode has contributed to further damaging everyone’s reputation, including the IMF, a partner in the process, and revealed the EU’s continued inability to offer credible and consistent policies.
...and Rome, Madrid, Lisbon, Athens...
Domenico Lombardi, director of CIGI's Global Economy program, comments on U.S. Treasury official Mark Sobel's role in pushing the G20 to "stimulate demand and refrain from imposing fiscal austerity too quickly."
While most people are oblivious to it, there is a war raging in the blogosphere over the role of macroeconomic stabilization policy in the current global conjuncture. The battle pits the illuminati of the economics profession (and sadly — pathetically — a well-known Harvard history professor) against each other in internecine debates over basic economic models and “what Keynes really meant” when he reflected on the human condition.
A dark cloud has once again descended over the global economy. The euro zone continues to languish in economic stagnation — unemployment across the region rose to 12.1 percent in March, while inflation fell to 1.2 percent. In the U.S., first quarter output growth was weaker than expected, on top of disappointing results at the end of last year.
This project explores the three main tracks to overcoming the barriers to sustainable development: how to raise the money; how to spend the money; and, how to design and govern the executing body.
At the recent Spring Meetings of the International Monetary Fund (IMF) and the World Bank, the IMF outlined what it called “Steps to Energize Global Recovery.” These were generally met with skepticism, as many observers pointed to a global “stalemate” that is preventing the implementation of the international policy framework needed to address the remaining challenges from the global financial crisis. To get a better understanding of the situation and of the related discussions at the IMF meetings, we talk to Domenico Lombardi, director of CIGI’s Global Economy Program and a former member of the IMF executive board.