Developing countries must first have a sound banking system before setting up a new stock exchange, according to a new study at Rotterdam School of Management, Erasmus University (RSM).The research - the first of its kind to focus on this issue - concluded that three main factors influence the long-run success of new stock exchanges. First, a country needs to possess or establish a strong financial backbone. As well as a well-structured banking sector, a significant stockpile of national savings, which is an indication of the demand by investors for trading on the exchange, is important. Finally, stock exchanges only thrive in the long run if they attract from the outset a sufficient number of listed companies.


  • Mathijs van Dijk
    Role: Faculty
    Reference type: Quoted

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