Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 7th International Conference on Economic Management and Green Development
Series Vol. 44 , 10 November 2023
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The Impact Automated Market Makers on Stock Prices and Returns
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Abstract
Examining the impact Automated market makers have on stock prices and returns is the focus of this study. Automated market makers are state-of-the-art financial instruments that facilitate the bilateral trade of digital assets in the DeFi industry. Market participants trade against pools of liquidity rather than individual buyers and sellers. Market returns, price changes, and liquidity levels will be analyzed both before and after the introduction of automated market makers. We’ll take a look at how automated market makers affect transaction costs, liquidity, and trading volume. Major stock markets that employ automated market makers will be surveyed for data collection and analysis. The effect of liquidity ratios on market performance will be studied statistically. Understanding the impact Automated market makers have on market returns and pricing is critical for traders, regulators, and researchers. Improved investment returns and the development of decentralized financial ecosystems may result from incorporating the results into market structure and liquidity. The implementation of automated market makers on centralized stock exchanges has been aimed at enhancing market efficiency. This research investigates the impact of automated market makers on stock prices and returns. Using monthly market returns from the closing index and equity price data, the study examines the effects before and after the implementation of automation. The study utilizes a longitudinal research design, analyzing listed firms with data spanning the study period. The findings contribute to the understanding of the influence of automated market makers on stock prices and returns, particularly in regions with limited literature on the subject.
Keywords
Automated Market Makers (AMMs), liquidity ratios, stock markets, market returns, price movements
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Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 7th International Conference on Economic Management and Green Development
- ISBN (Print)
- 978-1-83558-109-4
- ISBN (Online)
- 978-1-83558-110-0
- Published Date
- 10 November 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/44/20232187
- Copyright
- 10 November 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited