International market structure: global problems and micro solutions
Michael S. Pagano
Purpose – The purpose of this paper is to present new empirical evidence on global trends in equity-related transaction costs and trading volume, as well as to highlight recent research in international market microstructure. Design/methodology/approach – Estimates of brokerage commissions, indirect trading costs, and trading volume are obtained from a comprehensive institutional investor database. Quarterly data are used to compute trends in transaction costs and trading volume, as well as shifts in trading between mature and emerging markets. Findings – The results indicate a steady decline in brokerage commissions around the world but indirect trading costs appear to have reached a plateau. The fastest growth in trading volume can be found in the emerging markets of South America but the USA leads the way in terms of the steepest reductions in transaction costs. Research limitations/implications – The paper relies on one source of transaction cost estimates over a relatively short period (March 2005-December 2007). Originality/value – The paper provides comprehensive and current empirical evidence on important trends in international market microstructure.
International business, Market system, Structures, Trade
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