Abstract

http://ssrn.com/abstract=1298330
 
 

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On the Formation and Structure of International Exchanges


Matthew J. Clayton


University of Virginia - McIntire School of Commerce

Bjorn Jorgensen


London School of Economics & Political Science (LSE) - Department of Accounting

Kenneth A. Kavajecz


University of Wisconsin, Madison - Department of Finance, Investment and Banking

September 1999

NYU Working Paper No. FIN-99-057

Abstract:     
We investigate the formation and structure of 248 financial exchanges throughout the world. First, we empirically analyze the determinants of exchange formation as well as the impact of exchange formation on the domestic country's economy. Second, conditional on formation, we use a probit model to relate the choice of trading mechanism to the characteristics of the economic environment in which the exchange exists. We find that the main determinants of exchange formation in a country are the degree of economic freedom, the growth of the economy, the availability of technology, and the legal system. In addition, we find that the impact of exchange formation on the macro economy is limited to a reduction in the growth of the monetary aggregates with no significant impact on productivity. Lastly, our results show that the choice of trading mechanism depends on the country's economic development, the degree of competition, and the extent of economic freedom.

Number of Pages in PDF File: 35

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Date posted: November 11, 2008  

Suggested Citation

Clayton, Matthew J. and Jorgensen, Bjorn and Kavajecz, Kenneth A., On the Formation and Structure of International Exchanges (September 1999). NYU Working Paper No. FIN-99-057. Available at SSRN: http://ssrn.com/abstract=1298330

Contact Information

Matthew J. Clayton (Contact Author)
University of Virginia (UVA) - McIntire School of Commerce ( email )
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
434-243-4043 (Phone)
434-924-7074 (Fax)
Bjorn N Jorgensen
London School of Economics & Political Science (LSE) - Department of Accounting ( email )
Department of Accounting Room, OLD 2.17
Houghton Street
London, WC2A 2AE
United Kingdom
Kenneth A. Kavajecz
University of Wisconsin, Madison - Department of Finance, Investment and Banking ( email )
975 University Avenue
Madison, WI 53706
United States
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