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The historical dynamics of US financial exchanges

Published online by Cambridge University Press:  14 July 2021

Bjørn N. Jørgensen ,
Kenneth A. Kavajecz  and
Scott N. Swisher IV
Bjørn N. Jørgensen*
Affiliation:
Copenhagen Business School
Kenneth A. Kavajecz*
Affiliation:
Edgewood College and Phoenix Rising Advisory
Scott N. Swisher IV*
Affiliation:
Copenhagen Business School
*
Bjørn N. Jørgensen, Copenhagen Business School, email: bnj.acc@cbs.dk
Kenneth A. Kavajecz (corresponding author), Edgewood College and Phoenix Rising Advisory, Madison, WI53703, USA, email: kkavajecz@edgewood.edu
Scott N. Swisher IV, independent economist, email: snswisher@gmail.com.
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Abstract

The historical dynamics of entry and exit in the financial exchange industry are analyzed for a panel of 327 US exchanges 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 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, whereby an upward trend in literacy is an important driver of exchange entry.

Keywords

financial exchangeentryexitmergers

JEL classification

F36: Financial Aspects of Economic Integration L51: Economics of Regulation G15: International Financial Markets N20: General, International, or Comparative
Type
Articles
Information
Financial History Review , Volume 28 , Issue 2 , August 2021 , pp. 153 - 174
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Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of the European Association for Banking and Financial History

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Footnotes

We gratefully acknowledge helpful comments from Steven Durlauf and Jason Zweig, and excellent research assistance from Zachary Ferrara, Anthea Lai, Ivy Lun, Damien Chu Matthews and Kathleen Rogers. We also thank seminar participants at the University of Wisconsin macroeconomics working group and the 2012 Financial Management Association Annual Meeting. Finally, we would like to thank two anonymous referees as well as the editor Rui Pedro Esteves for their expert counsel. All remaining errors are our own.

References

Sources

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