Stock exchange industry in UAE: An assessment of potential merger between Dubai financial market and Abu Dhabi securities exchange
Abstract
Purpose
The purpose of this paper is to give an overview of UAE Stock Exchange industry. In particular this paper aims to assess a potential merger between Dubai Financial Markets-Nasdaq-Dubai and Abu Dhabi Securities Exchange, evaluating risks, rewards, policy and business implications.
Design/methodology/approach
The paper presents a theoretical framework and a literature review of M & As in financial sector. It then carries out a case study on a potential merger between the UAE Stock Exchanges and a discussion on the implications for the actors involved.
Findings
The contraction both in market capitalization and in trading value in the three UAE Stock Exchanges caused by subprime financial crisis and market fragmentation could be a key factors in implementing a merger between them. Because of high-fixed costs and trading platform, a single consolidated stock exchange may benefit from significant economies of scale, particularly network effects, and economies of scope.
Practical implications
This paper could be useful to Security and Commodity Authority, in order to support a merger between Dubai and Abu Dhabi Stock Exchange. Given that UAE capital market regulator has tried to improve efficiency in UAE stock market over the last years, a merger between UAE Stock Exchanges could have positive effects on overall efficiency.
Originality/value
It is the first paper that analyze UAE Stock Exchange industry. It is the first study that focusses on a potential merger between emerging markets’ stock exchanges. It is one of the first contributions that relates stock exchanges belonging to emerging and developed countries.
Keywords
Acknowledgements
The author would like to thank Laura Chiaramonte, Flavio Pichler, Maurizio Polato, Josanco Floreani and Ettore Croci for their comments as well as the AIB SE Conference (2012) reviewers. Furthermore the author thank anonymous referees of International Journal of Emerging Markets for valuable suggestions.
Citation
Paltrinieri, A. (2015), "Stock exchange industry in UAE: An assessment of potential merger between Dubai financial market and Abu Dhabi securities exchange", International Journal of Emerging Markets, Vol. 10 No. 3, pp. 362-382. https://doi.org/10.1108/IJoEM-12-2012-0181
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited