New regulatory initiatives pose stability risks: National Bank of Austria paper

A National Bank of Austria paper published on Tuesday outlines the unintended consequences of regulation to ban naked short-selling and to charge a tax on financial transactions.

Stefan Kerbl, the paper's author, builds an agent-based stock market model to examine whether a ban on short selling and the introduction of a Tobin tax will result in more stable asset prices or lead to greater financial instability. The author notes that just like medicine, regulatory measures in financial markets aim