Transactional Risk, Market Crashes, and the Role of Circuit Breakers¶
Greenwald, B. C., & Stein, J. C. (1991). Transactional Risk, Market Crashes, and the Role of Circuit Breakers. The Journal of Business, 64(4), 443-462.
Cited by¶
2 citations across 2 artifacts.
Each citation links to the sentence it supports in the citing article.
Mechanisms¶
- Deliberate Response-Delay Window
- Financial markets institutionalize the same logic as the trading circuit breaker — a mandatory halt when prices move too fast, so information can catch up before a cascade completes.
This sourceDescribes mandated market halts as circuit breakers used when markets move rapidly.
- Financial markets institutionalize the same logic as the trading circuit breaker — a mandatory halt when prices move too fast, so information can catch up before a cascade completes.
- Premature Activation Damping
- The guarding discipline is to size friction and margin to the actual premature-activation risk and the real cost of delay, and to pair damping with monitoring so masked pressure stays visible; a circuit breaker is meant to pause until information catches up
This sourceExplains circuit breakers as a response to informational problems during large trading shocks, allowing a pause for information to catch up.
- The guarding discipline is to size friction and margin to the actual premature-activation risk and the real cost of delay, and to pair damping with monitoring so masked pressure stays visible; a circuit breaker is meant to pause until information catches up
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