The importance and application of short selling in the capital markets

The importance of capital markets within the financial system is increasing daily. This is because the capital markets provide a source of funding for those who want to make large-scale investments. They offer long-term investment opportunities for savers who have funds while also creating liquid resources for those who want to make large-scale investments. Capital market instruments are used to raise capital in these markets. Securities are subject to buying and selling with various strategies, one of which is short selling transaction. Short selling involves selling securities that are not owned. In recent times, short selling transactions in capital markets have been a subject of considerable debate. The harm to small investors due to short selling transactions in many stocks is frequently emphasized. Despite ongoing discussions, academic studies on short selling are quite limited. No research has been conducted to measure the knowledge levels of investors regarding short selling. Therefore, this thesis aims to assess the financial knowledge levels of investors of short selling. In this context, the study covers not only theoretical information about short selling but also its legal basis and market impacts. An survey on short selling is administered to investors, and the results are analyzed and interpreted using SPSS 22.