Monday, August 20, 2007

What is the anatomy of distress selling?

© Bank for International Settlements ("BIS") has a working paper(No.229) on Distress selling and asset market feedback by Ilhyock Shim and Goetz von Peter.

This paper examines the process of distress selling and asset market feedback. It splits this process into several stages, in order to analyse what triggers distress selling, why asset prices fall, and how falling prices generate additional rounds of selling. This framework enables us to understand and compare models relevant to distress selling from diverse literatures.

The paper also considers what policy options are available at each stage to mitigate the adverse economic consequences of distress selling and asset market feedback


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