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Insider trading on Ottoman sovereign default: The Ottoman General Debt Bond at European and İstanbul financial markets

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  • Hanedar, Avni Önder
  • Yaldız Hanedar, Elmas
  • Göktan, Mehmet Gökhan

Abstract

Using efficient market hypothesis and structural break frameworks, this paper examines insider trading during the Ottoman sovereign default, as historical narratives claim information leakage. If the narratives were true, informed traders would sell the Ottoman government's bonds to avoid excessive losses before the default, creating a negative price shock in case of market inefficiency. This paper employs the Ottoman General Debt Bond prices in İstanbul, London, and Paris compiled from Ottoman and European newspapers. The results do not confirm price shocks just before the sovereign default announcement. Thus, investors seem to have anticipated the default before its official declaration.

Suggested Citation

  • Hanedar, Avni Önder & Yaldız Hanedar, Elmas & Göktan, Mehmet Gökhan, 2022. "Insider trading on Ottoman sovereign default: The Ottoman General Debt Bond at European and İstanbul financial markets," Finance Research Letters, Elsevier, vol. 47(PB).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000836
    DOI: 10.1016/j.frl.2022.102767
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    References listed on IDEAS

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    More about this item

    Keywords

    Ottoman empire; Sovereign default; Structural break; Sovereign bond; Insider trading; Efficient market;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913

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