Comparing the Traditional S&P 500 Market with the Carbon Credit Market: Analyzing the Impact of Blockchain on Market Efficiency, Liquidity, and Risk Dynamics

Abstract

In recent times, blockchain has emerged as an innovative solution and a supposed game-changer in many different domains such as Healthcare, Logistics, Business and more importantly, Finance. There is a common perception being held around blockchain technology, that it is a driving force and can streamline the processes involved in both traditional and emerging financial markets. It is seen as a solution that can fix all the inefficiencies and obstacles that exist within the financial market framework. This study approaches the matter by gauging whether adoption of blockchain brings improvement to financial markets our not. The analysis will revolve particularly around the following mix of traditional and emerging financial markets, that includes theblockchain-based companies listed in the S&P 500, non-blockchain companies listed in the S&P 500 and blockchain-based carbon trading. This study determines the efficiency of a given financial market based of off Price Discovery, Volatility, Transparency, Liquidity. Risk Dynamics and Price Delays. The researchers of this study also separately determine the mediating effects of Risk Dynamics and Liquidity on the Market Efficiency. Descriptive statistics, correlation analysis, regression and mediation analysis are used to achieve the purpose of this analysis. At the end, the study finds that the blockchain-based technology does improve the market efficiency of a market; however, to achieve the improvement, the market structure must be maintained.