Evaluation of market structure in stock exchange industry under network formation ; Vertybinių popierių biržų sektoriaus rinkos struktūros vertinimas formuojantis tinklams
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VYTAUTO DIDŽIOJO UNIVERSITETAS Jon÷ Šakalyt÷ VERTYBINIŲ POPIERIŲ BIRŽŲ SEKTORIAUS RINKOS STRUKTŪROS VERTINIMAS FORMUOJANTIS TINKLAMS Daktaro disertacijos santrauka Socialiniai mokslai, ekonomika (04 S) Kaunas, 2009 Disertacija rengta 2005 – 2009 metais Vytauto Didžiojo universitete. Mokslinis vadovas: Prof. dr. Valdon÷ Darškuvien÷ (Vytauto Didžiojo universitetas, Socialiniai mokslai, ekonomika – 04S) Disertacija ginama Vytauto Didžiojo universiteto Ekonomikos mokslo krypties taryboje: Pirmininkas: Prof. habil. dr. Zigmas Lydeka (Vytauto Didžiojo universitetas, Socialiniai mokslai, ekonomika – 04S) Nariai: Prof. dr. Kristina Levišauskait÷ (Vytauto Didžiojo universitetas, Socialiniai mokslai, ekonomika – 04S) Prof. dr. Violeta Pukelien÷ (Vytauto Didžiojo universitetas, Socialiniai mokslai, ekonomika – 04S) Doc. dr. Nerijus Mačiulis (ISM Vadybos ir ekonomikos universitetas, Socialiniai mokslai, vadyba ir administravimas – 03S) Prof. dr. Vytautas Snieška (Kauno technologijos universitetas, Socialiniai mokslai, ekonomika – 04S) Oponentai: Prof. dr. Vilija Aleknevičien÷ (Lietuvos žem÷s ūkio universitetas, Socialiniai mokslai, ekonomika – 04S) Prof. habil. dr. Aleksandras Vytautas Rutkauskas (Vilniaus Gedimino technikos universitetas, Socialiniai mokslai, vadyba ir administravimas – 03S) Disertacija bus ginama viešame Ekonomikos mokslo krypties tarybos pos÷dyje 2009 m.
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| Publié par | vytautas_magnus_university |
| Publié le | 01 janvier 2009 |
| Nombre de lectures | 30 |
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VYTAUTO DIDIOJO UNIVERSITETAS Jon÷akalyt÷ VERTYBINIŲPOPIERIŲBIRŲSEKTORIAUS RINKOS STRUKTŪROS VERTINIMAS FORMUOJANTIS TINKLAMS Daktaro disertacijos santrauka Socialiniai mokslai, ekonomika (04 S) Kaunas, 2009
Disertacija rengta 2005 2009 metais Vytauto Didoijo universitete. Mokslinis vadovas: Prof. dr. Valdon÷ Darkuvien÷, aislokunivojo tetaersicoai,sS iam ilinidito Dytau (V ekonomika 04S) Disertacija ginama Vytauto Didiojo universiteto Ekonomikos mokslo krypties taryboje: Pirmininkas: Prof. habil. dr. Zigmas Lydeka (Vytauto Didiojo universitetas, Socialiniai mokslai, ekonomika 04S) Nariai: Prof. dr. Kristina Leviauskai÷otD tyuajo odii (Vtai, aicoinilm ialskoivunsiertate Ss, ekonomika 04S) Prof. dr. Violeta Pukelien÷i moiniacial, Sotesasrtiinevoju iodDio uttaVy (alsk ,i ekonomika 04S) Doc. dr. Nerijus Mačiulis (ISM Vadybos ir ekonomikos universitetas, Socialiniai mokslai, vadyba ir administravimas 03S) Prof. dr. Vytautas Snieka (Kauno technologijos unvi ersitetas, Socialiniai mokslai, ekonomika 04S) Oponentai: Prof. dr. Vilija Aleknevičien÷ em (Lietuvos÷sūkio universitetas, Socialiniai mokslai, ekonomika 04S) Prof. habil. dr. Aleksandras Vytautas Rutkauskas (Vilniaus Gedimino technikos universitetas, Socialiniai mokslai, vadyba ir administravimas 03S) Disertacija bus ginama vieame Ekonomikos mokslo krypties tarybos pos÷dyje 2009 m. gruodio 10 dieną, 10 valandą, Vytauto Didiojo universitete, Maojoje sa÷lje. Adresas: S. Daukanto g. 28, Kaunas. Disertacijos santrauka isiuntin÷ta 2009 m. lapkričio 10 dieną. Su disertacija galima susipainti Lietuvos nacionalin÷je M. Mavydo ir Vytauto Didiojo universiteto bibliotekose.
VYTAUTAS MAGNUS UNIVERSITY Jon÷akalyt÷ EVALUATION OF MARKET STRUCTURE IN STOCK EXCHANGE INDUSRTY UNDER NETWORK FORMATION Summary of Doctoral Dissertation Social Sciences, Economics (04 S) Kaunas, 2009
The dissertation was prepared in 2005 2009 at Vytautas Magnus University. Scientific supervisor: Prof. dr. Valdon÷ Darkuvien÷ (Vytautas Magnus University, Social sciences, Economics 04S) The Council of Economics Sciences of Vytautas Magnus University: Chairman: Prof. habil. dr. Zigmas Lydeka (Vytautas Magnus University, Social sciences, Economics 04S) Members: Prof. dr. Kristina Leviauskait÷ Magnus University, Social sciences, (Vytautas Economics 04S) Prof. dr. Violeta Pukelien÷(Vytautas Magnus University, Social sciences, Economics 04S) Doc. dr. Nerijus Mač(ISM University of Management and Economics, Socialiulis sciences, Management and administration 03S) Prof. dr. Vytautas Snieka (Kaunas University of Technology, Social sciences, Economics 04S) Opponents: Prof. dr. Vilija Aleknevičien÷ University of Agriculture, Social sciences, (Lithuanian Economics 04S) Prof. habil. dr. Aleksandras Vytautas Rutkauskas (Vilnius Gediminas Technical University, Social sciences, Management and administration 03S) The public defense of the dissertation will take place on 10th of December, 2009, 10 a.m. at Vytautas Magnus University, Small Hall. Address: S. Daukanto st. 28, Kaunas. The summary of dissertation was sent out on 10thof November, 2009. The dissertation is available at the M. Mavydas National Library ofLithuania and Vytautas Magnus University library.
Relevance of the research. Liberalization of financial sector and internationalization of capital flows determined the constant increase of resources accumulated and allocated in financial sector. In the European Union since year 2000 lending of banking sector grew about 10% per year. So at the end of 2008 resources allocated in financial sector were about two times bigger of EU GDP. Specific functions of financial sector such as allocation of financial resources, monitoring of managers, diversification of risks, etc., distinguishes the financial sector from all other sectors in economy. Because of that the role of financial sector in economy has a multiplication effect. Traditionally it is assumed that financial sector plays an intermediation role in economy. And because of that the value added in other sectors may augment faster (Levine, 2004; Thiel, 2001). So, efficient and effective financial sector and its institutions might profit all other actors in economy. Recently a distinguishing feature of Lithuanian, as well as European and other economies in the world is networks among enterprises and their formation. It is also relevant to financial sector. In a stock exchange sector the network formation process is intensive and significant. The wave of mergers and acquisitions in a stock exchange sector that started at year 2000, still continues and is intensifying. This causes the formation of ownership links among exchanges. But different types of links forms as exchanges start using the same trading platform, trading indexes of other exchanges, creating strategic alliances, signing agreements of cooperation and intent. Intensification of link formation process causes establishment of alternative markets next to traditional stock exchanges. Technology possibilities are extended and they are adapted to computerized direct trading of equities. All these changes in stock exchange sector foster formation of new links among exchanges. As a consequence, a market structure of the sector, costs, profitability, effectiveness of exchanges changes. The need to examine a market structure arises from the connection between market structure and efficiency, which is evident at sectorial as well as at macroeconomic level. Evaluation of market structure helps to anticipate efficiency changes in a company as well as in entire economy. That is why market structure is in the center of interests of academics and practicians. National and international antitrust institutions and agencies play an important role by monitoring and regulating market structures in different sectors in order to maintain and increase the efficiency of
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companies and consumers’ value. It means that more precise evaluation of market structure allows choosing political instruments that are more efficient. Supervision of stock exchange sector and its institutions is provided by national agencies together with European agencies. Because of contemporary financial economic crises the role of these agencies expanded and the necessity of more effective political instruments increased. Extent of investigation of the scientific problem The concept of market structure includes number of buyers, behavior of companies, their size, boundaries of market entry, product differentiation, relative power of buyers and sellers, competition level and forms (Business Dictionary, 2009; Quast, 2007; Bagdanavičius, Stankevičius, Lukoevčiius, 1999). But because of the relevance of competition problem, the majority of empirical research on market structure narrows to evaluation of market concentration. Universality of these market structure evaluation models facilitates their application on different sectors. Universality and a big range of market structure evaluation models determined the development of market structure research. The researches are divided into two groups. One part of the researchers evaluates the influence of market structure on the results of a single company (or a selected group of companies) (Borenstein, Bushnell, Knittel, 1999; Schmiedel, 2001; Jansen, de Haan, 2003, Boone, van Ours, van der Wiel, 2007). In this case financial economic indicators of companies, such as profit elasticity, price and cost ratio, resources’ price elasticity, costs, are analyzed. In the other group of research (Algeria, Schaenk, 2008,Čepinskis, Gancevskait÷, 2008; Deltuvait÷, Giien÷, 2007; Economides, 2004), the market structure is evaluated at the sector or macroeconomic level by assessing the distribution of company’s market shares. The researchers raise the questions about assessment of market share and selection of the best indicator considering the peculiarities of the sector analyzed. N. Economides (2004) studies the peculiarities of market structure evaluation in network industries, eg. telephone and fax connections, Internet, stock exchanges, credit cards networks). He concludes that market structure indicators that capture the distribution of market shares and are the most common in research, have a limited ability to reveal changes of market structure in network industries.
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Most of the authors who aim to analyze stock exchanges and evaluate their activities use informational efficiency or production efficiency evaluation models. Application of informational efficiency models allows evaluating reaction of stock price to new information (Levine, 2004; Mishra, Paul, 2008; Dicle, Levendis, 2009). These models are applicable to financial market, but they are not suitable for evaluation of efficiency of stock exchanges and its sector. In other part of papers aiming to evaluate efficiency of stock exchange activities, production efficiency methods, such as profitability, costs functions, are used (Cybo-Ottone, di Noia, Murgia, 2000; Hasan, Malkamaki, 2000, Schmiedel, 2001, 2002). Sometimes specific indicators of stock exchange activity (quality of financial market, automation of trading, liquidity, turnover, capitalization) are also included into models of stock exchange efficiency evaluation (Bitzam, Wilson, 2007, Schmidel, 2001). First researches on network formation in a stock exchange industry were conducted about ten years ago (Cybo-Ottone, di Noia, Murgia, 2000; di Noia, 2001), when the wave of mergers and acquisitions started. Their authors concentrated on evaluation of ownership network formation as a result of mergers and acquisitions of exchanges. C. di Noia (2001) suggests the model for assessment of network externalities as an ownership link between two exchanges forms. The results of C. di Noia (2001) research suggest that ownership network formation in stock exchange industry might have a bigger positive effect on the customers’ (companies listed and traders) value than on a stock exchange. Despite that positive effect of network formation also gains customers, most of the researchers who aim to evaluate network formation in a stock exchange industry, concentrate only on estimation of financial and specific indicators of stock exchange activities and on analysis of their changes (eg. Malkamaki, Topi, 1999; Hasan, Malkamaki, 2000; Schmiedel, 2001, Gaa et al. 2001). In their models network formation factor is considered to be exogenous. Network formation process is not disclosed and not included into models of empirical research (Terol, Russo, 2000; Shy, Tarkka, 2001; Malkamaki, Topi, 1999; Malkamaki, 2000; Schmiedel, 2001; Schmiedel, Schonenberger, 2005; etc.). The authors of the papers agree on the research results. Network formation causes the prices in an exchange (listing and trading fees) to decrease. As technology links form economies of scale increases so that exchanges’
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costs decline and their productivity grows all this have a positive impact on turnover and capitalization of exchanges. I. Hasan and H. Scmidel (2003), representatives from the Bank of Finland, were the sole researchers investigating network formation process and the results in the European stock exchange sector. Their model suggests three indicators to measure network formation and includes all if them as independent variables. These indicators are number of different type of networks, number of types of networks an exchange is involved, number of members in the same network. The paper of I. Hasan and H. Scmiedel (2003) aims to evaluate the impact of network formation on exchange activity indicators, but the network formation in the sector are not very detailed. I. Hasan and H. Schmiedel (2003) as well as some other researchers (eg. Shy, Tarkka, 2001; Schmiedel, 2001) referring to the results of their research also make conclusions about changes in market structure: network formation increases competition in the sector that induces exchanges to function more efficient. However market structure is not directly evaluated. Indicators of market structure, that assess the distribution of market shares, are not included in their models. Considering limitations of the existing research on market structure and network formation, it is noted that evaluation of market structure in stock exchange industry under network formation should take allocation efficiency into consideration. Though, network formation that involves network appearance, network form and its changes, network disappearance is very little researched. So for research in network formation in stock exchange industry the specification of economic networks and estimation of its formation factors is needed. The results of the researches on market structure and network formation suggest that aiming to evaluate market structure under network formation the application of existing methods should be conservative. The existing researches do not examine models’ application limitation in the case of network formation in a sector. Consequently, this issue defines theresearch problemof the dissertation: how to evaluate market structure in stock exchange industry under network formation? Theobjectof the dissertation is market structure in a stock exchange industry. Theaim of the dissertation is to propose a model for evaluation of market structure in stock exchange industry under network formation.
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The main objectives of the dissertation are: 1. to generalize theoretical and empirical research on market structure and network formation and to assess their applicability to evaluation of market structure in stock exchange industry under network formation; 2. to compose a research model for evaluation of market structure in stock exchange industry under network formation; 3. to prepare methodology for a research on network formation in a stock exchange industry, adjusting social network research methods; 4. to prepare methodology for evaluation ofin reference to a research model market structure in a stock exchange industry, integrating indicators of market concentration and market density; 5. to research a market structure in a stock exchange industry under network formation and to examine the applicability of the model. Methods of the research The aim and objectives of the dissertation are achieved by using methods of systemic, synthesis, comparison, integration, generalization and logical analysis. Data for the empirical research was collected by applying quantitative content analysis method; the research was carried out by applying descriptive statistics, structural social network analysis, correlation analysis methods. Scientific novelty of the dissertation: · The typology of economic networks was composed. It defines horizontal and vertical networks and classifies then in accordance to legal background of link formation and network resources. ·network formation in a stock exchange industry wereThe main factors of identified, systematized and classified into three levels: micro, mezo and macro level. Their interrelations were estimated. It shows that the main factor of network formation in a stock exchange industry is increasing competition. · dissertation proposes a model to evaluate market structure in stock exchange industry under network formation. It shows a possibility to evaluate market structure in a stock exchange industry considering network formation. · The prepared methodology of research on market structure evaluation includes two methods: for network formation analysis and for market structure
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evaluation. Network formation research methods include identification of links, their classification, assessment of network attributes, estimation of network form, and measurement of network ratios. Market structure evaluation methods include measurement of market concentration and market density. · Social network research methods were applied for analysis of economic networks in stock exchange industry. This method was very rarely used in economic fields and limitations of its application are unknown. The results of the dissertation research showed that social network research methods can be applied for research on structural changes in a sector, but exposure of qualitative developments is limited. Practical significance of the dissertation: · market structure in stock exchange industryDissertation proposes a model for evaluation under network formation, which can be used by other scientists and practicians for their research. · Methodology for identification, classification and evaluation of economic links in a stock exchange industry, that is prepared and applied in the dissertation, can be applied for research in other sectors of economy. · Application of the prepared methodology for market structure evaluation under network formation, gave a possibility to improve the evaluation of market structure in a stock exchange industry. Limitations of the research: · Model of evaluation of market structure in the stock exchange industry under network formation, which is proposed in the dissertation, also includes the interrelation between market structure and allocation efficiency of the sector. Market structure can be evaluated considering changes of allocation efficiency. However, this aspect is not researched in the dissertation. · The dissertation reveals that application of market concentration measures for evaluation of market structure in stock exchange industry under network formation is limited. So proposed methods for evaluation of market structure are complex and include measures of market concentration and market density. Network clustering coefficient was suggested and applied to measure market density in stock exchange industry under network formation.
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SUMMARY OF THE DISSERTATION
In thefirst part the dissertation ofmodels of evaluation of market structure and network formation are analyzed. The analysis aims to generalize theoretical and empirical research on market structure and network formation and to assess their applicability to evaluation of market structure in stock exchange industry under network formation. It begins with the analysis of theoretical and empirical research in market structure. It is agreed that market structure is one of the main factors of firm’s behavior and it changes as firms behaves differently. The concept of market structure is wide. It includes number of buyers, their size, boundaries of market entrance, product differentiation, relative power of buyers and sellers, competition level, distribution of buyers and sellers (Business Dictionary, 2009; Quast, 2007; Bagdanavičius, Stankevičius, Lukoevičius, 1999). Despite this most of the research on market structure use a narrow definition of market structure and analyze changes of market concentration. Though structural changes in the market because of network formation might not have an impact of market concentration, but market structure should deviate anyway. So in the dissertation the definition of market structure by A. van Witteloostuijn ir Ch. Boone (2006) is used. Market structure is defined by combination of market concentration and market density. Vertical networks Supply Technology R&D Ownership Information Network resource Agreements Horizontal networks Associations Foundation of link Distribution Fig. 1 Typology of economic networks
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