Short selling has the potential to change the various dynamics. With short selling permitted, the concept of dividend yield will be no longer important. As yields on securities lent likely to exceed dividend yield. As a corollary to this, even growth stocks will become value stocks as the lenders in them will command substanially higher rates compared to general stocks. This in turn may fuel a spurt in the growth stocks. Also imagine the market size, as  all the shres that have been issues can be potentially lent. So, given the market capitalisation, which is greater than the GDP the market size of this market can be terrific. Also imagine the potentiality for the intermediaries. And also understand its impliaction on the banking industry. This can kill the business of lending in the capital markets. As now one need not borrow money to buy stocks, one can directly borrow stocks. So, given all this, I intended to get more into this.

 

Regards,

Vivek