Technology, Automation, and Productivity of Stock Exchanges: International Evidence

44 Pages Posted: 11 Oct 2007

See all articles by Markku Malkamäki

Markku Malkamäki

Evli Bank Plc

Heiko Schmiedel

European Central Bank - Securities Settlement Systems Policy Division

Iftekhar Hasan

Fordham University - Gabelli School of Business; Bank of Finland

Multiple version iconThere are 2 versions of this paper

Date Written: February 27, 2002

Abstract

The paper stresses on the importance of understanding the operational choices, strategies, and performances of stock exchanges as regular operating firms (Arnold et al (1999), and Pirrong (1999)) Using unbalanced panel data on 49 stock exchanges over the period 1989-1998, the paper traces the productivity of stock exchanges over time and across different types and groups of exchanges. We find significant variability in respect of the productivity - revenue and cost efficiency - across these exchanges. On average, North American exchanges are found to be most cost and revenue efficient. However, our findings also indicate that European exchanges have improved the most, in respect of cost efficiency, while exchanges in South America and Asia-Pacific regions are found to be lagging as regards both cost and revenue estimations. The evidence also indicates that investment in technology-related developments effectively influenced cost and revenue efficiency. Moreover, organisational structure and market competition are found to be significantly associated with both cost and revenue efficiency for the exchanges studied, whereas market size and quality are related only to revenue efficiency.

Keywords: stock exchanges, technological progress, technical efficiency

JEL Classification: C23, G2, L2, O50

Suggested Citation

Malkamäki, Markku and Schmiedel, Heiko and Hasan, Iftekhar, Technology, Automation, and Productivity of Stock Exchanges: International Evidence (February 27, 2002). Bank of Finland Research Discussion Paper No. 4/2002. Available at SSRN: https://ssrn.com/abstract=1020548 or http://dx.doi.org/10.2139/ssrn.1020548

Markku Malkamäki

Evli Bank Plc ( email )

Aleksanterinkatu 19 A
FIN-00100 Helsinki
Finland

Heiko Schmiedel

European Central Bank - Securities Settlement Systems Policy Division ( email )

Directorate General Payment Systems
Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany
+49-69 13 44 70 59 (Phone)
+49-69 13 44 60 00 (Fax)

Iftekhar Hasan (Contact Author)

Fordham University - Gabelli School of Business ( email )

Rose Hill Campus Bronx
New York, NY 10458
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

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