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- Title
Who Wins When Exchanges Compete? Evidence from Competition after Euro Conversion.
- Authors
Dewenter, Kathryn L; Han, Xi; Koski, Jennifer L
- Abstract
Using euro conversion as the trigger, we examine what drives volume and spread changes when stock exchanges compete. Results show average trading costs on European exchanges decrease almost 9%, and turnover increases over 30%. Trading costs decline or remain unchanged on all exchanges, but volume deteriorates in some markets and improves in others. Frankfurt, Paris, London, and Milan are winners, while Madrid and Brussels lose volume. We examine the role of the spread-volume relation, firm characteristics, exchange trading rules, and country-level factors in determining these outcomes. Results suggest that euro conversion prompted competition by increasing transparency in market prices.
- Subjects
FOREIGN exchange rates; EURO; FOREIGN exchange; FOREIGN exchange accounting; ORGANIZATIONAL transparency
- Publication
Review of Finance, 2018, Vol 22, Issue 6, p2037
- ISSN
1572-3097
- Publication type
Article
- DOI
10.1093/rof/rfx029