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Reshaping financial systems. New technologies and financial innovations - evidence from the United States, Mexico and Brazil

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  • Ewa Lechman

    ()
    (Gdansk University of Technology, Gdansk, Poland)

  • Adam Marszk

    ()
    (Gdansk University of Technology, Gdansk, Poland)

Abstract

The paper unveils whether ICT diffusion determines development of financial innovation in emerging economies. Particularly, we examine the impact of ICT adoption on changing values of exchange traded funds in Brazil and Mexico, comparing it to the United States as reference country (benchmark). Our methodological framework includes descriptive statistics, logistic growth models (used to estimate ETFs growth) and generalized linear models (used to check for relationship between ICT adoption and ETFs value). In each case we run country-specific estimates. Data on ICT adoption (approximated by Internet Users and Fixed Broadband Subscriptions) are exclusively derived from World Telecommunication/ICT Indicators Database 2012 (16th edition), and exchange traded funds from funds’ providers and reports published by BlackRock. Analysis period is set for 2000-2012. Empirical findings collectively conclude that in all three countries, growth of ICT was pervasive, and this was accompanied by fast development of exchange traded funds in Mexico and in the United States, measured by increases in assets under management. Moreover, in the period 2002-2012 Mexico has caught up with the United States in terms of ETFs share in total investment funds (sum of assets of ETFs and mutual funds). In Brazil, even though ETFs growth rates were high, in 2012 share of ETFs in investment funds remained at a relatively lower level of 0.17%. Additionally, the relationship between ICT adoption and ETFs development was reported as strong, positive and statistically significant in each of analyzed countries.

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File URL: ftp://ftp.zie.pg.gda.pl/RePEc/gdk/wpaper/WP_GUTFME_A_20_LechmanMarszk.pdf
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Bibliographic Info

Paper provided by Faculty of Management and Economics, Gdansk University of Technology in its series GUT FME Working Paper Series A with number 20.

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Date of creation: Jan 2014
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Handle: RePEc:gdk:wpaper:20

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Keywords: emerging markets; ICT; ETFs;

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References

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  1. W. Scott Frame & Lawrence J. White, 2002. "Empirical studies of financial innovation: lots of talk, little action?," Working Paper 2002-12, Federal Reserve Bank of Atlanta.
  2. Geroski, P. A., 2000. "Models of technology diffusion," Research Policy, Elsevier, vol. 29(4-5), pages 603-625, April.
  3. Geert Bekaert & Campbell R. Harvey & Christian Lundblad, 2007. "Liquidity and Expected Returns: Lessons from Emerging Markets," Review of Financial Studies, Society for Financial Studies, vol. 20(6), pages 1783-1831, November.
  4. Laurent Deville, 2008. "Exchange Traded Funds: History, Trading and Research," Post-Print halshs-00162223, HAL.
  5. Ewa Lechman, 2013. "New Technologies Adoption and Diffusion Patterns in Developing Countries. An Empirical Study for the Period 2000-2011," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 8, pages 79-106.
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