Demutualization and Stock Market Efficiency a Study on Asian Economies.

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Area of Study:
Economics, Finance & Banking

Proposed Research Title for the Degree of Master of Finance by Research -------------------------------------------------
The Dynamics of Stock Market Demutualization and Its Interplay with Stock Market Efficiency: Critical Assessment of the Performance of Global Demutualized Market, Lessons Learned and Policy Implications for Bangladesh



Master by Research Candidate
Md. Abdullah Raihan
Assistant Professor of Economics
International Islamic University Chittagong
Date of Submission
15th February, 2013

1. Introduction and Problem Statement
The demutualization of stock exchange is a recent new phenomenon in the spare of global financial world with a history of approximately 20 years, meaning that till the early 1990s; most of the world stock exchanges were non profit, mutual organization with monopoly power, owned by their members (Islam& Islam, 2012). The demutualization of an exchange is a process by which a non-profit member-owned organization is transformed into a for-profit shareholder corporation. Ownership is somewhat open (WFE Survey, 2005). IOSCO (2000) defines demutualization as the transformation of an exchange into a for-profit shareholder-owned company. The pace of exchange demutualization in developed market jurisdictions has been quite rapid. In the fifteen years since the first exchange demutualization took place in 1993 in Stockholm, Switzerland, 21 exchanges in developed market jurisdictions have demutualised – representing almost 40% of the membership of the World Federation of Exchanges (WEF, 2003). In contrast, the pace of demutualization in emerging market jurisdictions has been relatively slower.
Available literature found that a demutualized exchange can borrow from conventional lenders such as banks. Whereas mutualized stock exchanges have to look...
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