The Small Stock Exchanges in South - East European Countries: The Future after the Crisis.

The aim of this paper is to identify the effects of the regional and global stock exchange mergers and integrations, and to recommend options that South-East European stock exchanges should consider in future. The global financial crisis brought considerable economic decline in 2008, and this has remained the case until today, putting the future existence of South-East European stock exchanges into question. The paper will focus on the impact that these mergers/integrations have on market liquidity, and the required rate of return. We have made a comparative analysis of selected SEE and worldwide-developed stock exchanges in terms of some market indicators. To calculate the Stock Exchanges' required rate of return we developed a modified Capital Asset Pricing Model suitable for emerging market economies. Then, we determined the breadth, depth and liquidity of the Macedonian Stock Exchange using a number of different liquidity measures. Based on the results from these analyses, we recommend several options for SEE stock exchanges: developing on their own for which aggressive policy measures for developing internal financial markets must be devised; building links with substantially larger and better developed markets to establish virtual trading venues, borrowing advanced platforms and visibility; and, to a start regional integration process (mergers/acquisitions). [ABSTRACT FROM AUTHOR]