The Historical Dynamics of Financial Exchanges
47 Pages Posted: 5 Sep 2011 Last revised: 7 Feb 2019
Date Written: February 5, 2019
Abstract
The historical dynamics of entry and exit in the financial exchange industry are analyzed for a panel of 741 exchanges in 52 countries from 1855 through 2012. We focus on economic, technological, and regulatory factors. Using novel panel data evidence, we empirically test whether these factors are consistent with existing financial theories. We find that US exchanges are 4.6% more likely to exit per year after the passage of the Securities Exchange Act. The telephone, literacy, and regulation are robust predictors of financial exchange dynamics. The upward trend in literacy is an important driver of exchange entry.
Keywords: Financial exchanges, entry, exit, mergers, hazard model
JEL Classification: N20, G15, L51, F36
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