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Democratizing Finance - Is it justifiable to capitalize on the decline of a security? Short Selling - Is it ethically justifiable to capitalize on a potential decline of a specific security?

  • The following Bachelor Thesis is firstly concerned with the topic of short selling and the impact it has on a company and its 's stock price while presenting its ability to help market liquidity, price discovery, and price efficiency. To present the twofold of the matter, this paper aims to portray short selling as a risk management tool by diversifying a company's portfolio and identifying the risks for the market. In the fourth chapter, democratizing finance is described, particularly the access to trading platforms, and the potential risk on market efficiency is analysed in depth. These matters then intersect in the following chapters by considering the intentions the retail investors had to increase their holdings in a failing company and then posing the question of whether the short position held by institutional investors was reasonable and sophisticated. This paper finds evidence that the majority of new retail investors entering the capital market belong to Generation Y (1981-1995) and Generation Z (after 1995). Furthermore, there are implications for believing that the easy access and zero-commission trading contribute to the surge in the market, thus concluding that the democratization of finance enables more non- professional traders to participate in the capital market. Referencing the Financial Crisis of 2008, the paper's objective is also to find a direct tie between the impact on those affected and the participation in the 2021 collective investment in Gamestop. This paper, however, did not find any self-sustaining evidence that the Financial Crisis of 2008 was their [retail investors] primary motive to invest. Lastly, there is an analysis of the potential developments in the financial market due to more market participants and the potential market manipulation.

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Metadaten
Author:Steffie Grundmann
Referee:Solveig Reißig-Thust
Advisor:Michael Faustino-Bauer
Document Type:Bachelor Thesis
Language:English
Date of first Publication:2022/03/18
Publishing Institution:Hochschulbibliothek HWR Berlin
Granting Institution:Hochschule für Wirtschaft und Recht Berlin
Release Date:2023/01/30
Institutes:FB I - Wirtschaftswissenschaften / International Business Management (IBMAN) B.A.
Licence (German):License LogoUrheberrechtsschutz