European stock exchange networks connections, structure and complexity

Abstract

Economic integration and political liberalization of capital flows – all this made financial market institutions from different countries very much dependent on each other. Processes in separate financial markets are influenced by similar external factors; the competition level between institutions is increasing not only in local but in global level as well. Although there are quite many analysis and research on integration of financial markets and its institutions, only few of them analyze formal connections between institutions in financial sector. Anyway their scope is limited being based on one type of connections. Most of the researchers as well as practitioners agree that connections between stock exchanges form networks. Despite this, there is a lack of detailed empirical analysis about stock exchange networks, their connections, structures and complexity. One of the key researches in the field is made by I. Hasan and H. Schmiedel (2003) who analyzed and revealed the peculiarities of connection formation in stock exchange industry. Their findings show that networks in European stock exchange industry increased their efficiency by lowering exchanges’ costs and increasing financial flows. Since then the quantity and quality of stock exchange connection have changed. [...]