Nascent markets: Understanding the success and failure of new stock markets
We study the success and failure of 59 newly established (“nascent”) stock markets since 1975 in their first 40 years of activity. Nascent markets differ markedly in their success, as measured by number of listings, market capitalization, and trading activity. Long-term success is in part determined by early success: a high initial number of listings and trading activity are necessary, though not sufficient, conditions for long-term success. Banking sector development at the time of establishment and development of national savings over the life of the stock market are the other two most reliable predictors of success. We find little evidence that structural factors such as country size or legal and political institutions matter. Rather, our results point to an important role of banks, demand factors, and initial success in fostering long-term stock market development.
|Keywords||stock markets, emerging and developing economies, success factors|
|Publisher||International Institute of Social Studies of Erasmus University (ISS)|
|Series||ISS Working Papers - General Series|
|Journal||ISS Working Paper Series / General Series|
Albuquerque de Sousa, J.A, Beck, T, van Bergeijk, P.A.G, & van Dijk, M.A. (2016). Nascent markets: Understanding the success and failure of new stock markets (No. 623). ISS Working Paper Series / General Series (Vol. 623, pp. 1–67). International Institute of Social Studies of Erasmus University (ISS). Retrieved from http://hdl.handle.net/1765/94639