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Financial Markets Diffusion Patterns. The Case Of Mexican Investment Funds

Author

Listed:
  • Adam Marszk

    (Gdansk University of Technology, Gdansk, Poland)

  • Ewa Lechman

    (Gdansk University of Technology, Gdansk, Poland)

  • Harleen Kaur

    (Faculty of Management and Information Technology, Hamdard University, Hamdard, India)

Abstract

Exchange traded funds (ETFs) are one of the most influential financial innovations, reshaping the investment funds market in many countries, including Mexico. Due to their similar investment objectives, ETFs are considered substitutes for mutual funds. This paper examines the changes of the investment funds (ETFs and mutual funds) in Mexico over 2002-2012 using a category of the innovation diffusion models, i.e. logistic growth models in order to explore the key development patterns. Descriptions of the selected categories of investment funds are provided in the first section of the article, together with the advantages of ETFs as opposed to mutual funds. Next section presents data sources and methodological framework, with detailed description of the innovation diffusion models applied in the research (based on 3-parametric logistic curve). Sum of assets under management of ETFs and mutual is considered as the size of the total investment funds market. Empirical findings indicate the significant development of the ETF market, both in terms of assets under management and market share. According to the presented estimations, Mexican ETF market development can be described with the logistic growth models, and three characteristic phases of the logistic curve were clearly observable. Predicted ETF market development patterns point towards further increase of market share of ETFs over the next 3-5 years yet the probability of exceeding the level of ca. 20-30% seems low

Suggested Citation

  • Adam Marszk & Ewa Lechman & Harleen Kaur, 2016. "Financial Markets Diffusion Patterns. The Case Of Mexican Investment Funds," GUT FME Working Paper Series A 34, Faculty of Management and Economics, Gdansk University of Technology.
    • Handle: RePEc:gdk:wpaper:34
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    References listed on IDEAS

    as
    1. Laurent Deville, 2008. "Exchange Traded Funds: History, Trading, and Research," Springer Optimization and Its Applications, in: Constantin Zopounidis & Michael Doumpos & Panos M. Pardalos (ed.), Handbook of Financial Engineering, pages 67-98, Springer.
    2. V. Srinivasan & Charlotte H. Mason, 1986. "Technical Note—Nonlinear Least Squares Estimation of New Product Diffusion Models," Marketing Science, INFORMS, vol. 5(2), pages 169-178.
    3. Geroski, P. A., 2000. "Models of technology diffusion," Research Policy, Elsevier, vol. 29(4-5), pages 603-625, April.
    4. Agapova, Anna, 2011. "Conventional mutual index funds versus exchange-traded funds," Journal of Financial Markets, Elsevier, vol. 14(2), pages 323-343, May.
    5. Adam Marszk & Ewa Lechman & Harleen Kaur, 2017. "Financial Markets Diffusion Patterns. The Case Of Mexican Investment Funds," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 12(1), pages 83-100, March.
    6. Lechman, Ewa & Marszk, Adam, 2015. "ICT technologies and financial innovations: The case of exchange traded funds in Brazil, Japan, Mexico, South Korea and the United States," Technological Forecasting and Social Change, Elsevier, vol. 99(C), pages 355-376.
    7. Ewa Lechman, 2015. "ICT Diffusion in Developing Countries," Springer Books, Springer, edition 127, number 978-3-319-18254-4, September.
    8. Srichander Ramaswamy, 2011. "Market structures and systemic risks of exchange-traded funds," BIS Working Papers 343, Bank for International Settlements.
    9. Laurent Deville, 2008. "Exchange Traded Funds: History, Trading and Research," Post-Print halshs-00162223, HAL.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    exchange traded funds; mutual funds; diffusion models; financial innovation; Mexico;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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