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Designing Markets for Developing Countries
Author(s) -
O’Hara Maureen
Publication year - 2001
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/1468-2443.00026
Subject(s) - capital market , market liquidity , market microstructure , equity (law) , emerging markets , listing (finance) , business , price discovery , developing country , market system , financial market , industrial organization , monetary economics , economics , financial economics , finance , microeconomics , order (exchange) , political science , law , economic growth , futures contract
This paper highlights what we know from market microstructure and how this should guide the design of equity markets in developing counties. I first consider the basic economic functions of capital markets and of exchanges. I develop more fully the importance of price discovery and liquidity, and how these are affected by the market environment and by characteristics of firms themselves. I then consider the particular implications of this for capital markets in emerging countries. Research has suggested various links between market designs and performance, and I review the implications of these for exchange structure. I conclude with some thoughts on how best to structure markets for newly listing companies.