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Origins of the Tokyo Stock Exchange: Path Dependence of Trading Systems

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Listed:
  • Ishida, Shigehiro
  • Yokoyama, Kazuki

Abstract

The histories of certain stock exchanges suggest that stockbrokers were already versed in the rules and methods of existing trading types prior to the foundation of these exchanges. This paper addresses the establishment of the Tokyo Stock Exchange (TSE) during the 19th century in Japan, with a focus on the extent to which the TSE’s adopted system resembled rules and methods already familiar to brokers. The majority of the primary brokers at the TSE had dealt with yogin trading, which involved the foreign exchange of Mexican and Japanese silver currencies. This paper finds that the evolution of the stock trading systems in the TSE is a case of path dependence in that it originates from yogin trading, and that the narrative that regards futures trading at Osaka Dojima in the 18th century as the prototype of stock trading is an case of the invention of tradition that has exaggerated historical facts.

Suggested Citation

  • Ishida, Shigehiro & Yokoyama, Kazuki, 2023. "Origins of the Tokyo Stock Exchange: Path Dependence of Trading Systems," MPRA Paper 118829, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:118829
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    File URL: https://mpra.ub.uni-muenchen.de/118829/1/MPRA_paper_118829.pdf
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    References listed on IDEAS

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    1. Michie, Ranald, 2001. "The London Stock Exchange: A History," OUP Catalogue, Oxford University Press, number 9780199242559.
    2. Ito, Takatoshi, 1993. "Efficiency of the Rice Futures Market in Osaka in the 18th Century," Economic Review, Hitotsubashi University, vol. 44(4), pages 339-350, October.
    3. Pierson, Paul, 2000. "Increasing Returns, Path Dependence, and the Study of Politics," American Political Science Review, Cambridge University Press, vol. 94(2), pages 251-267, June.
    4. Banner, Stuart, 1998. "The Origin of the New York Stock Exchange, 1791-1860," The Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 113-140, January.
    5. Nakabayashi, Masaki, 2019. "Ownership structure and market efficiency," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 61(C), pages 189-212.
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    More about this item

    Keywords

    Tokyo Stock Exchange; Yogin trading; Path dependence; Invention of tradition.;
    All these keywords.

    JEL classification:

    • N2 - Economic History - - Financial Markets and Institutions
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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