The Success and Failure of Emerging Stock Markets

The Erasmus Financial Markets Centre (EFMC) has initiated a new research project on the determinants of success and failure in new stock markets around the world. There are currently around 150 stock exchanges around the world, but most research on stock markets focuses on a handful of developed markets in Europe and North America. And although the surge in emerging markets research since the early 1990s has enhanced our knowledge of a further 30 markets or so, many of these emerging stock markets have existed for a long time. Our current understanding of stock markets is thus also limited to those that are relatively mature. This study will broaden the scope of our knowledge by analyzing a large group of stock markets in developing countries and emerging markets that have been established relatively recently.

The project is led by Peter van Bergeijk and Mathijs van Dijk and aims at understanding how stock market structures evolve and which executable government policies can boost financial market development (and potentially economic growth). Focusing on the early phase of 50 stock markets that have been (re-)established over the past 25 years, we want to analyze the financial, institutional and political economy determinants of success and failure of emerging stock markets. The ultimate goal is to aid policy makers in developing countries and emerging markets in their decision whether and how to establish a new stock market and/or to make existing stock markets in these countries more successful.