TITLE : EXPLORING THE
HIATUS IN UNDERSTANDING
STOCK MARKET
MANIPULATION : A
COMPREHENSIVE REVIEW
INTRODUCTION
• Market manipulation is when someone artificially affects the supply or demand for a
security (for example, causing stock prices to rise or to fall dramatically).
• Market manipulation may involve techniques including:
 Spreading false or misleading information about a company
 Engaging in a series of transactions to make a security appear more actively traded;
and.
 Rigging quotes, prices, or trades to make it look like there is more or less demand for
a security than is the case.
METHODOLOGY
Literature Review -: The manipulation of the stock market is a complex and ever-evolving problem with
significant implications for investor trust and market efficiency. This literature review aims to provide you
with a comprehensive overview of the key themes and findings in this field.
1`.Role of Social Media in Financial Markets (Smith, 2018):This foundational study establishes the
increasing influence of social media on financial markets. It explores how information dissemination
through platforms like Twitter,Discord and Reddit can rapidly impact stock prices, laying the groundwork
for understanding the dynamics of online financial discussions.
2.
Market Manipulation in the Digital Age (Jones et al., 2019): This research focuses on the
evolving landscape of market manipulation, emphasizing the shift towards digital platforms. It identifies
challenges in defining and detecting manipulation within the context of social media, highlighting the
need for updated regulatory frameworks.
This brief literature review underscores the growing significance of social media in financial markets and
highlights the multifaceted challenges associated with detecting and mitigating stock market manipulation
in the digital age. The studies collectively emphasize the need for interdisciplinary approaches, combining
finance, technology, and regulatory perspectives to address these challenges effectively.
OBJECTIVES OF STOCK
MARKET
The objectives of the stock market can be viewed from two main perspectives: facilitating economic growth
and providing opportunities for investors.
From the perspective of economic growth there are following methods -:
1.Capital formation: The stock market allows companies to raise capital by issuing shares, which can be
used for expansion, innovation, and job creation. This helps drive economic growth and
development.Efficient allocation of capital: The market mechanism of supply and demand drives capital
towards companies with the best growth potential, leading to a more efficient allocation of resources in
the economy.
2.Corporate accountability: Publicly traded companies are subject to greater scrutiny and transparency,
which can improve corporate governance and decision-making. From the perspective of investors:
3.Wealth creation: Investing in the stock market offers the potential for higher returns than other asset
classes like bonds or savings accounts, allowing investors to grow their wealth over the long term.Income
generation: Some companies pay dividends to their shareholders, providing a regular stream of income .
4.Risk diversification: Investing in a diverse portfolio of stocks can help mitigate risk and improve overall
portfolio performance.
RESEARCH QUESTION
“How
does the existing influence on social media impact the prevention and
regulatory response to stock market manipulation,and what role does
technological advancements play in shaping the ambulation of complex
relationship?”
RESEARCH GAP
Despite the extensive research on stock market manipulation, there remains
a notable gap in understanding the impact of emerging decentralized
technologies, such as blockchain and cryptocurrencies, on the detection
and prevention of market manipulation. The problem arises from the
evolving landscape of financial markets, where traditional manipulative
techniques may be adapted or entirely replaced by innovative strategies
facilitated by decentralized platforms.
This research aims to address the gap by investigating how blockchain
technology and decentralized finance may introduce new challenges or
opportunities in detecting and preventing market manipulation.
RESEARCH PROBLEM
The problem statement centers on the need to comprehend the unique
features of decentralized systems that could either amplify existing
manipulation risks or offer novel solutions to enhance market integrity.
This includes exploring the role of smart contracts, anonymity features,
and the decentralized nature of blockchain in shaping manipulative
practices and regulatory responses.
REFERENCES
• Brown, A., & White, L. (2021). “Market Manipulation: Strategies and
Countermeasures.” Journal of Finance, 45(2), 215-232
• European Commission. (2021). “Market Manipulation Regulation: A
Comparative Analysis.” Brussels: European Union Publications.
• Jones, R., et al. (2020). “Defining Market Manipulation: A Conceptual
Framework.” Journal of Financial Regulation, 28(3), 301-318.
• Kim, J., et al. (2022). “Technological Advancements and Emerging Risks
in Stock Market Manipulation.” Journal of Financial Engineering, 18(1),
56-73.