Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296486 
Year of Publication: 
2024
Series/Report no.: 
BOFIT Discussion Papers No. 7/2024
Publisher: 
Bank of Finland, Bank of Finland Institute for Emerging Economies (BOFIT), Helsinki
Abstract: 
We analyse the impact of the introduction of a new technology on the National Stock Exchange in India that allowed trading of stocks without the need to transfer paper share certificates (demat trading). We document a decrease in the bid-ask spread and an increase in trading volume following its introduction particularly for those stocks that were previously illiquid. We present evidence that suggests that the primary channel for the increase in liquidity was the elimination of the risk of being sold forged securities as the clearing system took on the risk of reimbursing buyers of forged shares at the introduction of demat trading.
Subjects: 
Liquidity trading
Bid-ask Spead
Frauds
Market manipulations
JEL: 
G18
G19
G28
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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