The Consolidation of Stock Exchanges in Small Nations : does it mprove liquidity and development?

Abstract

The purpose of this thesis is to examine the claims of economists and stock exchange management that consolidation of stock exchanges, either regionally or globally, does benefit their consumers. A review of the major issues is addressed prior to testing with two models. The first model examines the claim that consolidating stock exchanges increases liquidity. The second model examines the claim that consolidation increases the size and economic importance of a stock exchange in the nation’s economy. The results indicate that these claims cannot be fully supported as consolidation did not provide significant evidence of improvement in either model. While there may be delayed benefits, or other benefits related to consolidation, there clearly was not an immediate boost in liquidity or market capitalization in multinational exchange groups relative to their collective national peers.