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New technologies and diffusion of innovative financial products: Evidence on exchange-traded funds in selected emerging and developed economies

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  • Marszk, Adam
  • Lechman, Ewa

Abstract

Exchange-traded funds (ETFs) are one of the most rapidly-expanding categories of innovative financial products that have been introduced on many financial markets, in both emerging and developed economies. Our research contributes to the present state of knowledge by examining factors, including information and communication technologies (ICTs), influencing the diffusion of ETFs. In our research, we consider also the impact of other segments of the financial system, such as the banking sector, and changes in the real side of the economy. The main aim of the paper is to provide empirical evidence on relationships between penetration of ICTs and diffusion of ETFs. Using a sample of 32 emerging and developed economies; we analyze all countries for which data on the turnover of ETFs on the local stock exchanges are available. The time span of our analysis is 2004–2014. The methodological framework combines innovation diffusion models, which are applied to characterize the key features of the process of diffusion of ETFs and ICT, with dynamic panel models, panel VAR models with exogenous variables and VAR models with exogenous variables (for country-specific analysis), which are used to examine the relationships between ETFs, ICTs, and other selected factors. Our major findings confirm that adoption of ICTs constitutes an important prerequisite for the diffusion of ETFs due to potential demand- and supply-side linkages. Among the other factors that potentially influence the diffusion of ETFs, we found three variables that demonstrate positive and statistically significant impacts: stock market turnover, financial development, and financial markets. Country-wise VAR models with selected exogenous variables confirm the influence of ICTs in most of the countries analyzed.

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  • Marszk, Adam & Lechman, Ewa, 2019. "New technologies and diffusion of innovative financial products: Evidence on exchange-traded funds in selected emerging and developed economies," Journal of Macroeconomics, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:jmacro:v:62:y:2019:i:c:s0164070417305736
    DOI: 10.1016/j.jmacro.2018.10.001
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    More about this item

    Keywords

    Exchange-traded funds; Financial innovations; Information and communication technologies; Diffusion;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • 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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