Hostname: page-component-848d4c4894-hfldf Total loading time: 0 Render date: 2024-05-20T16:10:38.963Z Has data issue: false hasContentIssue false
  • English
  • Français

The Future of Stock Exchanges: Determinants and Prospects

Published online by Cambridge University Press:  17 February 2009

Stijn Claessens ,
Daniela Klingebiel  and
Sergio L. Schmukler
Get access

Abstract

We study the determinants of stock market development and the growing migration of capital raising, listing, and trading activity to international exchanges. Economies with better fundamentals – better legal systems, greater macro stability – have larger and more liquid markets. As fundamentals improve, however, the degree of migration to international exchanges also increases. Corporations enjoy lower costs and more liquid shares. Consequently, fully-fledged local stock exchanges become less necessary for many economies. Migration can further lead to such a reduction in domestic activity that would render a local exchange unsustainable. Therefore, the functions and forms of stock exchanges in many economies need rethinking.

Type
Articles
Information
European Business Organization Law Review (EBOR) , Volume 3 , Issue 2 , June 2002 , pp. 403 - 438
Copyright
Copyright © T.M.C. Asser Press and the Authors 2002

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Baker, H. K., Nofsinger, J. R., AND Weaver, D. G., 1999. “International Cross-Listing and Visibility”, NYSE Working Paper 99-01, January.CrossRefGoogle Scholar
Bekaert, G., Harvey, C., AND Lundblad, C., 2001. “Does Financial Liberalization Spur Growth?”, Columbia Business School, Duke University and Indiana University (20 April 2001).CrossRefGoogle Scholar
Beck, T., Demirguc-Kunt, A., Levine, R., AND Maksimovic, V., 2001. “Financial Structure and Economic Development: Firm, Industry, and Country Evidence”, in: Financial Structure and Economic Growth (Asli, Demirguc-Kunt and Ross, Levine [eds.]) (MIT Press 2001).Google Scholar
Beck, T., Levine, R., AND Loayza, N., 2000. “Finance and the Sources of Growth”, 58 (1-2) Journal of Financial Economics (2000) 261–300.CrossRefGoogle Scholar
Catalan, M., Impavido, G., AND Musalem, A. R., 2000. “Contractual Savings of Stock Market Development: Which Leads?”, Policy Research Working Paper 2421 (World Bank, August 2000).Google Scholar
Chaplinksy, S. and Ramchand, L., 2000. “The Impact of Global Equity Offerings”, 55 (6) Journal of Finance (2000) 2767–2789.CrossRefGoogle Scholar
Claessens, S., Djankov, S., AND Klingebiel, D., 2001. “Stock Markets in Transition Economies”, Financial Sector Discussion Paper No. 5 (World Bank, September 2001).Google Scholar
Claessens, S., Klingebiel, D., AND Schmukler, S. 2001. “FDI and Stock Market Development: Complements or Substitutes?”, mimeo (World Bank 2001).Google Scholar
Claessens, S., Klingebiel, D., AND Schmukler, S. 2002. “The Future of Stock Markets in Emerging Economies: Evolution and Prospects”, Working Paper (World Bank 2002).Google Scholar
Claessens, S., Klingebiel, D., AND Schmukler, S. 2002. “Explaining the Migration of stocks from Exchanges in Emerging Economies to international Centers”, CEPR Discussion Papers Series (U.K.) No. 3301, pp. 1–39.Google Scholar
Clayton, M. J., Jorgensen, B. N., AND Kavajecz, K. A., 1999. “On the Formation and Structure of International Exchanges”, mimeo, The Stern School of Business, New York University (September 1999).CrossRefGoogle Scholar
Demirguc-Kunt, A. and Levine, R. (eds.), 2001. Financial Structure and Economic Development (Cambridge, Massachusetts: MIT Press 2001).CrossRefGoogle Scholar
Doidge, C., 2001. “Do Changes in Law Matter for Corporate Ownership and Control? Evidence for Emerging Markets Firms that Lists in the U.S.”, mimeo, Ohio State University (2001).Google Scholar
Doidge, C., Karolyi, G. A., AND Stulz, R., 2001. “Why are foreign firms listed in the U.S. worth more?”, mimeo, Ohio State University (2001).CrossRefGoogle Scholar
Domowitz, I. and Steil, B., 1999. “Automation, Trading Costs, and the Structure of the Trading Service Industry”, Second Annual Brookings-Wharton Conference on Financial Services.Google Scholar
Domowitz, I. J. Glenn and Madhavan, A., 2001a. “Liquidity, Volatility and Equity Trading Costs Across Countries and Over Time”, 4:2International Finance (Summer 2001) 221–255.CrossRefGoogle Scholar
Domowitz, I. J. Glenn and Madhavan, A., 2001b. “International Evidence on Aggregate Corporate Financing Decisions”, in: Financial Structure and Economic Growth (Asli, Demirguc-Kunt and Ross, Levine [eds.]) (MIT Press 2001).Google Scholar
Foerster, S. and Karolyi, G. A., 1999. “The effects of market segmentation and investor recognition on assets prices: evidence from foreign stock listing in the US”, 54 Journal of Finance (1999) 981–1014.CrossRefGoogle Scholar
Foerster, S. and Karolyi, G. A., 2000, “The Long Run Performance of Global Equity Offerings”, 35 Journal of Financial and Quantitative Analysis (2000) 499–528.CrossRefGoogle Scholar
Jain, P., 2001. “Institutional Design, and Liquidity at Stock Exchanges around the World”, mimeo, Indiana University (October 2001).Google Scholar
Hargis, K., 2000. “International Cross-Listing and Stock Market Development in Emerging Economies”, 9(2) International Review of Economics and Finance (2000) 101–122.CrossRefGoogle Scholar
Henry, P. B., 2000a. “Stock Market Liberalization, Economic Reform, and Emerging Market Equity Prices”, 55(2) Journal of Finance (April 2000) 529–564.CrossRefGoogle Scholar
Henry, P. B., 2000b. “Do Stock Market Liberalization Cause Investment Booms?” 58(1) Journal of Financial Economics (October 2000) 301–334.CrossRefGoogle Scholar
Kaminsky, G., Lyons, R., AND Schmukler, S., 2001. “Mutual Fund Investment in Emerging Markets – An Overview”, 15(2) World Bank Economic Review (2001) 315–340.CrossRefGoogle Scholar
Kaminsky, G. and Schmukler, S., 2001. “On Booms and Crashes: Financial Liberalization and Stock Market Cycles”, mimeo (World Bank 2001).Google Scholar
Karolyi, G. A., 1998. “Why Do Companies Lists Shares Abroad? A Survey of the Evidence and Its Managerial Implications”, Financial Markets, Institutions and Instruments, Volume 7, Number 1 (Boston: Blackwell 1998).Google Scholar
Karolyi, G. A., 2001, “DaimlerChrysler AG, The First Truly Global Share”, mimeo, Ohio State University (December 2001).CrossRefGoogle Scholar
Karolyi, G. A. and Stulz, R. M., 2002. “Are Financial Assets Priced Locally or Globally?”, Handbook of the Economics of Finance, George Constaninides, Milton, Harris, and Stulz, René M. (eds.) (North-Holland 2002).Google Scholar
King, R. G. and Levine, R., 1993. “Finance and Growth: Schumpeter Might Be Right”, 108(3) Quarterly Journal of Economics (1993) 717–737.CrossRefGoogle Scholar
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., AND Vishny, R. W., 1998. “Law and Finance”, 106(6) Journal of Political Economy (1998) 1113–1155.CrossRefGoogle Scholar
Lee, , AND Steil, B., 2002. “Changes in the Ownership and Governance of Securities Exchanges: Causes and Consequences”, mimeo (Council on Foreign Relations, New York 2002).CrossRefGoogle Scholar
Levine, R., 1997. “Financial Development and Growth”, 35 Journal of Economic Literature (1997) 688–726.Google Scholar
Levine, R. and Schmukler, S., 2001. “The Effects of Cross-Listing on Local Equity Markets”, mimeo (World Bank 2001).Google Scholar
Levine, R. and Zervos, S., 1998. “Stock Markets, Banks, and Economic Growth”, 88(3) American Economic Review (1998) 537–558.Google Scholar
Lins, K., Strickland, D., AND Zenner, M., 2001. “Do Non-U.S. Firms Issue Equity on U.S. Stock Exchanges to Relax Capital Constraints”, mimeo, David Eccles School of Business, University of Utah.Google Scholar
Ljundqvist, A., Jenkinson, T., AND Wilhelm, W., 2000. “Global Integration in Primary Equity Markets: The Role of U.S. Banks and U.S. Underwriters”, mimeo, New York University (September 2000).CrossRefGoogle Scholar
Miller, D. 1996, “Why do foreign firms list in the United States? An empirical analysis of the depositary receipt market”, 51 Journal of Financial Economics (1996) 103–123.CrossRefGoogle Scholar
Miller, D. and Puthenpurackal, J., 2000. “The Costs, Wealth Effects and Determinants of International Capital Raising: Evidence from Public Yankee Bonds”, mimeo, Indiana University and Texas A&M University.CrossRefGoogle Scholar
Moel, , Alberto, , 2001, “The Role of American Depositary Receipts in the Development of Emerging Markets”. Economia (Brookings Institution, Fall 2001).Google Scholar
Pagano, M., Roell, A., AND Zechner, J., 1999. “The Geography of Equity Listing: Why Do European Companies List Abroad?”, CSEF working paper 28 (October 1999).CrossRefGoogle Scholar
Pagano, M., Randl, O., Roell, A., AND Zechner, J., 2001. “What Makes Stock Exchanges Succeed?: Evidence from Cross-Listing Decisions”, 45 European Economic Review (2001) 770–782.CrossRefGoogle Scholar
Pagano, M., Panetta, F., AND Zingales, L., 1998. “Why Do Companies Go Public: An Empirical Analysis”, 53:1Journal of Finance (1998) 27–64.CrossRefGoogle Scholar
Perotti, E. and van Oijen, P., 2000. “Privatization, Political Risk, and Stock Market Development in Emerging Markets”, mimeo, University of Amsterdam.CrossRefGoogle Scholar
Pistor, K., Raiser, M., AND Gelfer, S., 2000. “Law and Finance in Transition Economies, Economics of Transition”, 8(2) EBRD (2000) 325–368.Google Scholar
Pulatkonak, M. and Sofianos, G., 1999. “The Distribution of Global Trading in NYSE-Listed Non-U.S. Stock”, NYSE Working Paper 99-03 (March 1999).Google Scholar
Rajan, R. and Zingales, L., 1998. “Financial Dependence and Growth”, 88(3) American Economic Review (1998) 559–586.Google Scholar
Reese, W. A. Jr. and Weisbach, M. S., 2000. “Protection of Minority Shareholder Interests, Cross-listing in the United States, and Subsequent Equity Offerings”, mimeo, Tulane University/University of Illinois (January 2001).CrossRefGoogle Scholar
Sarkissan, S. and Schill, M. J., 2000. “The Overseas Listing Decision: New Evidence of Promixity Preference”, mimeo, McGill University/University of California (April 2000).Google Scholar
Schmukler, S. and Vesperoni, E., 2001a. “Globalization and Firms' Financing Choices: Evidence from Emerging Economies”, World Bank Policy Research Working Paper 2323.CrossRefGoogle Scholar
Schmukler, S. and Vesperoni, E., 2001b. “Firms' Financing Choices in Bank-Based and Market-Based Economies”, in: Financial Structure and Economic Growth (Asli, Demirguc-Kunt and Ross, Levine [eds.]) (MIT Press 2001) 347–375.CrossRefGoogle Scholar
Schmiedel, H., 2001. “Technological Development and Concentration of Stock Exchanges in Europe”, Bank of Finland Discussion Papers 21/2001.CrossRefGoogle Scholar
Steil, , Benn, , 2001, “Creating Securities Markets in Developing Countries: A New Approach for the Age of Automated Trading”, 4:2International Finance (Summer 2001) 257–278.CrossRefGoogle Scholar
Subrahmanyam, A. and Titman, S., 1999. “The Going-Public Decision and the Development of Financial Markets”, 54(3) Journal of Finance (1999) 1045–1082.CrossRefGoogle Scholar