Research Discussion Papers, Bank of Finland
No 4/2002:
Technology, automation, and productivity of stock exchanges: International evidence
Iftekhar Hasan ()
, Markku Malkamäki and Heiko Schmiedel
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; (follow links to similar papers)
JEL-Codes: C23; G20; L20; O50; (follow links to similar papers)
44 pages, February 27, 2002
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