Economics Dictionary of ArgumentsHome
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| Wash trade: A wash trade is a form of market manipulation where an individual or a group of traders simultaneously buys and sells the same financial instrument. This practice creates a false impression of high trading volume and activity, without any genuine change in ownership or market risk. Wash trading is illegal in most jurisdictions. See also Fake transactions, Krypto wahs trading._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Dictionary of Arguments. | |||
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NBER Working Papers on Wash Trade - Dictionary of Arguments
NBER I 6 Wash Trade/NBER/Cong/Li/Tang/Yang: Most of the academic literature on wash trading in traditional markets focuses on investor behavior (e.g., Grinblatt and Keloharju, 2004)(1). We are the first* to establish wash trading at the exchange level in the new crypto markets. More broadly, our study belongs to the literature on manipulation and misreporting in finance. >Crypto wash trading, >Crypto transactions, >Regulated crypto exchanges. Cryptocurrency: Concerning cryptocurrency markets, Foley, Karlsen, and Putninš (2019)(2) study the illegal usage of cryptocurrencies; Gandal, Hamrick, Moore, and Oberman (2018)(3) and Griffin and Shams (2020)(4) discuss manipulative behavior in Bitcoin and Tether; Li, Shin, and Wang (2020)(5), among others, document pumpand-dump patterns in various cryptocurrencies; most recently, Choi and Jarrow (2020)(6) discuss crypto bubbles caused by speculation or manipulation. These studies do not examine wash trading, which our unique and comprehensive data set allows us to do using robust yet straightforward procedures. >Cryptocurrency. * Lin William Cong, Xi Li, Ke Tang, and Yang Yang. (2022). Crypto Wash Trading. NBER Working Paper No. 30783. Cambridge, MA. ** Our paper therefore adds to forensic finance and accounting—the use of economic and financial knowledge to discover or substantiate evidence of criminal wrongdoing that meets standards in a court of law (e.g., Allen and Gale, 1992(7); Jarrow, 1992(8); Christie and Schultz, 1994(9); Ritter, 2008(10); Zitzewitz 2012)(11). 1. Grinblatt, M. and Keloharju, M. (2004). Tax-loss trading and wash sales. Journal of Financial Economics, 71(1), 51-76 2. Foley, S., Karlsen, J. R., and Putniņš, T. J. (2019). Sex, drugs, and bitcoin: How much illegal activity is financed through cryptocurrencies? The Review of Financial Studies, 32(5), 1798-1853. 3. Gandal, N., Hamrick, J., Moore, T., and Oberman, T. (2018). Price manipulation in the Bitcoin ecosystem. Journal of Monetary Economics, 95, 86-96. 4. Griffin, J. M., and Shams, A. (2020). Is Bitcoin really untethered? The Journal of Finance, 75(4), 1913-1964. 5. Li, T., Shin, D., and Wang, B. (2020). Cryptocurrency pump-and-dump schemes. Available at SSRN 3267041. 6. Choi, S.H., and Jarrow, B. Testing the Local Martingale Theory of Bubbles using Cryptocurrencies, Working paper. 7. Allen, F., and Gale, D. (1992). Stock-price manipulation. The Review of Financial Studies, 5(3), 503-529. 8. Jarrow, R. A. (1992). Market manipulation, bubbles, corners, and short squeezes. Journal of financial and Quantitative Analysis, 27(3), 311-336. 9. Christie, W. G., and Schultz, P. H. (1994). Why do NASDAQ market makers avoid odd‐eighth quotes? The Journal of Finance, 49(5), 1813-1840. 10. Ritter, J. R. (2008). Forensic finance. Journal of Economic Perspectives, 22(3), 127-147. 11. Zitzewitz, E. (2012). Forensic economics. Journal of Economic Literature, 50(3), 731-769._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. "Vs" indicates differences in content, not necessarily the chronological progression of a controversy. If a German edition is specified, the page numbers refer to this edition. |
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