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On the Formation and Structure of International Exchanges

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  • Matthew J. Clayton

    (New York University)

  • Bjorn N. Jorgensen

    ()
    (Harvard University)

  • Kenneth A. Kavajecz

    (University of Pennsylvania)

Abstract

We investigate the formation and structure of 248 financial exchangesthroughout the world. First, we empirically analyze the determinantsof exchange formation as well as the impact of exchange formation onthe domestic country's economy. Second, conditional on formation, weuse a probit model to relate the choice of trading mechanism to thecharacteristics of the economic environment in which the exchangeexists. We find that the main determinants of exchange formation in acountry are the degree of economic freedom, the size of the economy,the availability of technology, and the legal system. In addition, wefind that the impact of exchange formation on the macro economy islimited to a reduction in the growth of the monetary aggregates withno significant impact on productivity. Lastly, our results show thatthe choice if trading mechanism depends on the country's economicdevelopment, the degree of competition, and the extent of economicfreedom.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 99-079/2.

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Date of creation: 08 Oct 1999
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Handle: RePEc:dgr:uvatin:19990079

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Cited by:
  1. Scott Baier & Gerald P. Dwyer, Jr. & Robert Tamura, 2003. "Does opening a stock exchange increase economic growth?," Working Paper 2003-36, Federal Reserve Bank of Atlanta.
  2. Hasan, Iftekhar & Malkamäki, Markku, 2000. "Are Expansions Cost Effective for Stock Exchanges? A Global Perspective," Research Discussion Papers 20/2000, Bank of Finland.
  3. Claessens, Stijn & Kingebiel, Daniela & Schmukler, Sergio L., 2002. "Explaining the Migration of Stocks from Exchanges in Emerging Economies to International Centres," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Ben Slimane, FATEN, 2007. "L'Evolution des Marchés Boursiers Européens: Enjeux et limites
    [European Stock Market Evolution]
    ," MPRA Paper 2607, University Library of Munich, Germany.
  5. Hasan, Iftekhar & Malkamaki, Markku & Schmiedel, Heiko, 2003. "Technology, automation, and productivity of stock exchanges: International evidence," Journal of Banking & Finance, Elsevier, vol. 27(9), pages 1743-1773, September.
  6. Malkamäki, Markku & Topi, Jukka, 1999. "Strategic Challenges for Exchanges and Securities Settlement," Research Discussion Papers 21/1999, Bank of Finland.

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