Multidimensional comparison of European stock exchanges

There have been numerous studies, which have examined the relationships between transition economies and developed ones as well as among different sectors of the economy. Many studies have established strong linkages between financial sector development and economic growth (Greenwood and Jovanovic 1990, Blackburn and Hung 1998, King and Levine 1993, Levine, Loayza and Beck 2000, Koivu 2002).

Development of the financial sector influences economic development thus the capital market plays an important role in market-oriented economies. In the past, the London Stock Exchange was the most important financial institution in Europe, and other domestic capital markets were far from it. Creating pan-European stock exchanges, which create the trading platform for some domestic markets, changed the situation in Europe, although the London Stock Exchange together with EURONEXT have still been one of the most developed.

At present the majority of stock exchanges in Europe list domestic and foreign enterprises, which are often double-listed i.e. on the domestic capital market and in selected stock exchanges. However two types stock exchanges could be distinguished i.e. the ones that operate mostly on the domestic market or even on part of it, and the ones that operate on several markets.

The aim of the paper is an analysis of the development of European capital markets with special attention paid to the position of stock exchanges from transitional European countries (i.e. emerging markets). The research concerns stock exchanges affiliated with The Federation of European Securities Exchanges (FESE). The position of selected stock exchanges is evaluated employing multivariate statistical analysis methodology, using (1) the synthetic measure of development (following Hellwig, 1968 idea), (2) the indicator of the relative development (non-pattern method), and (3) the vector synthetic measure of development. Taxonomic measures are evaluated for 19 European stock exchanges for the years 2002-2011. The research is provided on the basis of data provided by FESE.