Determinants of stock exchange integration: evidence in worldwide perspective

Abstract

Purpose – This paper contains an empirical analysis of determinants of international integration projects over the time period 1995-2010. After a broad discussion of the existent literature, the investigation combines a large number of potentially relevant determinants for the explanation of whether stock exchanges are participating in formal integration projects. The paper aims to discuss these issues. Design/methodology/approach – The methodology is based on multistage statistical data analysis, using correlation and cluster analyses to investigate the presence of integration trend between existing stock exchange projects, while multivariable logit regression examines the determinants of stock exchange integration. Findings – The paper confirms empirically the set of drivers of financial integration. Moreover, the paper provides quantitative estimations of probability of stock exchange integration estimated for different explanatory variables. The paper demonstrates that financial harmonization, cross-membership-agreements, for-profit corporate structure, trading engine and regional integration are important drivers of stock exchange integration. By contrast, high size of stock exchange market has negative impact on the likelihood of successful merger. This result is, especially, important in terms of financial regulation. Practical implications – Results highlight the importance of stock exchange market in terms of exposure to systemic shocks and the linkages with the overall size of the economy. Originality/value – The paper contributes to the existing literature and extends the analysis of determinants of stock exchange integration. In particular, the existence of de jure stock market integration projects suggests to design a special regulatory framework in order to benefit the important consequences of the integration phenomenon and to decrease the risk of financial contagion.

Linkages among U.S. Treasury Bond Yields, Commodity Futures and Stock Market Implied Volatility: New Nonparametric Evidence

“…Alaoui et. al, 2015;Chien et.al., 2015;Darbar & Deb, 1999;Dorodnykh, 2014;Elton & Gruber, 1995;Engsted & Tanggaard, 2002;Karolyi, 1995;Mantegna & Stanley, 2000;Roll, 1989) focused on investigating financial market contagion and integration. Research of Darbar and Deb (1999) showed evidence of significant linkages across asset markets in United States between years 1987 and 1993 and proposed close connection between the commodity and currency markets and between stock and bond markets.…”

Impact of Demutualization on Market Quality

“…This change has resulted in an increase in competition among exchanges for cross-listing and cross-trading in order to get benefit from both short-term and long-term efficiency (Werner and Kleidon, 1996;Kokkoris and Olivares-Caminal, 2008). Despite the development of the economy as a whole, demutualization also helps to develop the financial markets (Dorodnykh, 2014). Demutualization has increased the market share, trading volume and has reduced the bid-ask spread (Slimane, 2012).…”

Impacto de fusões e aquisições na eficiência e produtividade de operadoras de infraestruturas do mercado financeiro e sistemas de negociação

“…Em grande medida devido à busca por mais eficiência e melhores resultados financeiros 7 , o setor tem assistido a eventos de consolidação (fusões e aquisições -F&A) que se acentuaram na última década (Committee on Payment and Settlement Systems, 2010;Dorodnykh, 2014;Lo, 2013;Norman, 2011 G20 e BCBS Discussão a respeito de padrões para cálculo de margem para derivativos de balcão não liquidados em CCP.…”

“…No setor de IMFs e bolsas, F&As podem permitir economias de custos operacionais graças a economias de escala e escopo, economias com gastos de TI e com o gerenciamento integrado de colaterais e maior liquidez para os mercados (Dorodnykh, 2014;Norman, 2011).…”

“…Dorodnykh (2014) destaca que há outras formas de integração que podem se apresentar como passos em direção à integração total, como acordos transfronteiriços (cross-border deals), listagem cruzada (cross-listing) e aceitação cruzada e remota de membros (cross-remote membership).Domowitz e Steil (1999) listam, além das fusões, alianças estratégicas, joint ventures e sistemas de acesso e de negociação comuns.…”