Is competition beneficial? : the case of exchange traded funds

The first paper is co-authored with Sylvain Delalay. We examine the impact of competition between ETFs on measures of market quality of the funds. The surge in new ETF creation has for consequence that groups of competing ETFs are increasingly crowded, and investors can choose from a multitude of similar ETFs. Across all ETFs, results show evidence of improved market quality measures when competition increases within a group. However, we find that competition has a differential impact on ETFs according to their size and performance. For large or well-performing ETFs, increased competition improves market quality, whereas for small or under-performing ETFs, market quality is negatively affected by competition. The gold market was not overlooked by this surge in ETF creation. Within a decade, gold ETFs have acquired a position of importance on the gold market, and the potential to influence more traditional gold instruments.