Journal of Financial Economics Vol. 47 No. 3 1998
Short-term traders and liquidity:
Abstract
The abolition and reinstatement of the forward trading facility (Badla) on the Bombay Stock Exchange is used to study the effect of short-term traders on share prices and liquidity. The reactions of stock prices to the ban reveal an average negative abnormal return of 15% on Badla stocks as compared to the non-Badla stocks. The ensuing period shows a significant decline in the liquidity of the Badla Stocks related to the announcement period CARs. Our results suggest that the market perceives short-term traders as playing a significant positive role, with a larger benefit accruing to the relatively less-liquid stocks.
- DOI
- 10.1016/s0304-405x(97)00048-2
- Volume
- 47
- Issue
- 3
- Pages
- 339-355
- Language
- en
- Sources
- crossref openalex bibtex:phds-export.bib