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The Impact of Technological Improvements on Developing Financial Markets: The Case of the Johannesburg Stock Exchange

Review of Development Finance, Volume 3, Issue 4, July–December 2013, Pages 204–213

22 Pages Posted: 16 Sep 2011 Last revised: 2 Oct 2014

Mehmet F. Dicle

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business

John Levendis

Loyola University New Orleans

Date Written: May 5, 2013

Abstract

Can a significant technological improvement make an economically justifiable contribution to a financial market’s development? The Johannesburg Stock Exchange (JSE) incorporated the SETS system from the London Stock Exchange in 2002. It is certain that SETS is a technologically efficient trading system and it would undoubtedly improve trading in the JSE. We test whether SETS represents a structural break by examining whether there was an increase in the JSE’s liquidity, market efficiency and international integration after the introduction of SETS. We find that, though SETS was certainly a technological improvement which has increased liquidity, it was not a sufficient factor to render it efficient. However, the JSE became more independent after the incorporation of SETS. It now offers better diversification opportunities for international investors.

Keywords: Johannesburg Stock Exchange, market efficiency, market development, structural change

JEL Classification: G14, G15

Suggested Citation

Dicle, Mehmet F. and Levendis, John, The Impact of Technological Improvements on Developing Financial Markets: The Case of the Johannesburg Stock Exchange (May 5, 2013). Review of Development Finance, Volume 3, Issue 4, July–December 2013, Pages 204–213. Available at SSRN: https://ssrn.com/abstract=1927989 or http://dx.doi.org/10.2139/ssrn.1927989

Mehmet F. Dicle (Contact Author)

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business ( email )

6363 St. Charles Avenue
New Orleans, LA 70118
United States

HOME PAGE: http://researchforprofit.com

John Levendis

Loyola University New Orleans ( email )

6363 St. Charles Ave., box 15
New Orleans, LA 70118
United States

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