Globalization Effect on Stock Exchange Integration

Armanious, Amir

doi:10.2139/ssrn.1929045

Cited by 7 publications

(8 citation statements)

References 17 publications

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“…As a result, stock exchanges started changing their structures and then integrated, consolidated, merged or allied with other stock exchanges either domestically or cross-borders. Moreover, there are different forms of integration can be presented as steps towards the full integrated stock exchange: cross-border deals, restructuring (domestic mergers), cross-remote membership, cross-listing, cross-membership and cross-listing, and other forms of alliances (Shy and Tarkka, 2001;Hasan and Schmiedel, 2004;Armanious, 2007;Nicolini, 2010). In fact, Di Noia (1998) showed that the increase in competition among the securities markets in Europe, has produced mergers, technological agreements takeovers, and the creation of new exchanges, even within the same country.…”

Section: Determinants Of Stock Exchange Integrationmentioning

confidence: 99%

“…Next, many studies also confirm that stock exchange stakeholders can create important non-official integration links, which can be the first steps towards consolidation. Following El Serafie and Abdel Shahid (2002) and Armanious (2007), we test Cross-Membership variable. The change of organizational structure of exchanges was found to be a very relevant factor in integration decision (Aggarwal, 2002;Aggarwal and Dahiya, 2006).…”

Section: Determinants Of Stock Exchange Integrationmentioning

confidence: 99%

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Determinants of stock exchange integration: evidence in worldwide perspective

Dorodnykh

2014

Journal of Economic Studies

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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.

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Section: Determinants Of Stock Exchange Integrationmentioning

confidence: 99%

Section: Determinants Of Stock Exchange Integrationmentioning

confidence: 99%

Determinants of stock exchange integration: evidence in worldwide perspective

Dorodnykh

2014

Journal of Economic Studies

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“…The role of stock exchanges in the financial markets and their relationship with financial market integration has been analysed too. Armanious (2005) highlighted how an increasing globalization of the world economy should obviously have an impact on the behaviour of national stock markets, which in turn will push the stock exchanges to merge together in order to make economic growth. In the meanwhile Reddy (2003) stated that financial market integration fosters the necessary condition for a country's financial sector to emerge as an international or a regional financial centre.…”

Section: Literature Reviewmentioning

confidence: 99%

How Much Globalization Is There in the World Stock Markets and Where Is It?

Nicolini

Dorodnykh

2013

Asset Pricing, Real Estate and Public Finance Over the Crisis

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Globalization, as the process of integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration and the spread of technology, has been analyzed by academic literature in different manners. Anyway a comprehensive analysis in a worldwide perspective that compares all the main stock markets' performances in a long term period misses. In this paper, the authors try to fill this gap by a correlation analysis applied to stock exchange market indexes. This methodology is implemented in order to highlight the dynamic trend of financial market globalization. The paper investigates the degree of association of weekly returns for 53 international stock exchanges from 1995 to 2010 in a year-by-year approach, trying to evaluate how the average correlation through national stock indexes changed by the time. Moreover, an analysis of single geographical areas (North America and Canada, Latin America, Asia and Oceania, Northern Europe, Eastern Europe and Western Europe) has been done in order to test the hypothesis that globalization follows a homogenous (or heterogeneous) path. Results suggest an upward globalization trend that is developing at an increasing growth rate. Furthermore, an analysis of single geographical areas supports the hypothesis that globalization is a heterogeneous phenomena where different cluster of countries are engaged in different manners.

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“…In recent years the stock exchange industry has undergone rapid and profound transformations due to globalization (Lee, 2002;Armanious, 2007), technological and regulatory innovations and changes in the major stock exchanges' governance. Technological developments (Macey and O'Hara, 1997;Hasan et al, 2002;Lee, 2002), and regulatory innovations (Market in Financial Instruments Directive, 2004/39 EEC), by reducing communications and transaction costs, and favoring remote access by trading parties, have broken down barriers to entry and allowed new actors, that is multilateral trading facilities, to deliver trading services traditionally considered the core business of stock exchanges.…”

Section: Introductionmentioning

confidence: 99%

Stock exchange industry in UAE

Paltrinieri

2015

International Journal of Emerging Markets

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Purpose – The purpose of this paper is to give an overview of UAE Stock Exchange industry. In particular this paper aims to assess a potential merger between Dubai Financial Markets-Nasdaq-Dubai and Abu Dhabi Securities Exchange, evaluating risks, rewards, policy and business implications. Design/methodology/approach – The paper presents a theoretical framework and a literature review of M & As in financial sector. It then carries out a case study on a potential merger between the UAE Stock Exchanges and a discussion on the implications for the actors involved. Findings – The contraction both in market capitalization and in trading value in the three UAE Stock Exchanges caused by subprime financial crisis and market fragmentation could be a key factors in implementing a merger between them. Because of high-fixed costs and trading platform, a single consolidated stock exchange may benefit from significant economies of scale, particularly network effects, and economies of scope. Practical implications – This paper could be useful to Security and Commodity Authority, in order to support a merger between Dubai and Abu Dhabi Stock Exchange. Given that UAE capital market regulator has tried to improve efficiency in UAE stock market over the last years, a merger between UAE Stock Exchanges could have positive effects on overall efficiency. Originality/value – It is the first paper that analyze UAE Stock Exchange industry. It is the first study that focusses on a potential merger between emerging markets’ stock exchanges. It is one of the first contributions that relates stock exchanges belonging to emerging and developed countries.

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Globalization Effect on Stock Exchange Integration

Cited by 7 publications

References 17 publications

Determinants of stock exchange integration: evidence in worldwide perspective

Determinants of stock exchange integration: evidence in worldwide perspective

How Much Globalization Is There in the World Stock Markets and Where Is It?

Stock exchange industry in UAE

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