Financial Asset Tokenization and Market Efficiency: Evidence from Liquidity and Pricing Dynamics
Abstract
Financial asset tokenization in capital markets has become a structural innovation that transforms the trading processes, ownership, and the flow of liquidity through both market settings (OECD, 2020; Zhang et al., 2024). Tokenization transforms the market participants by converting the claims to financial instruments into transferable digital tokens that are stored in distributed-ledger infrastructures (Chaleenutthawut et al., 2021; Kaal, 2021). The article discusses the relationship between tokenization and market efficiency, considering liquidity behavior and price movements on the token markets with the aid of market efficiency, price discovery, and interpretations of the trading activity theories (Fama, 1998; Touski and Doostian, 2024). It is discussed whether tokenized assets can make bid-ask spreads tighter, enhance trading depth, faster transmission of arbitrage, and be more accessible, and it also examines scenarios where platform fragmentation, inhomogeneous participation by investors, and speculative trading can undermine short-term price stability (Almudhaf, 2018; Evans, 2018; Huang, 2024). Specifically, the discussion puts into the spotlight the ways in which transparency facilitated through blockchain, fractionalization, and near-continuous trading may contribute to the creation of informational efficiency and liquidity, but also creates new friction related to the design of custody, interoperability between exchanges, and competition between venues. The article adds to the growing debate on the degree to which blockchain-based tokenization improves or introduces complexity to the efficiency of contemporary financial systems through synthesizing conceptual mechanisms and empirically informed insights into digital-asset and adjacent financial markets (Wu et al., 2024; Zhang et al., 2024). The results highlight that tokenization is not a one-sided solution that will strengthen the liquidity or pricing efficiency; more likely, the outcomes of such a solution are subject to market mechanism design, institutional involvement, and technological-trading behavior interface. The article then places tokenization as a changing market architecture, the implication of which efficiency must be evaluated using the combined prism of liquidity dynamics, the quality of price discovery, and the structural market conditions.
Keywords
Financial Asset Tokenization, Market Efficiency, Liquidity Dynamics, Pricing Efficiency, Digital Asset Markets, Blockchain-Based Securities, Trading Microstructure
Citations
IRE Journals:
Oksana Anatolyevna Malysheva "Financial Asset Tokenization and Market Efficiency: Evidence from Liquidity and Pricing Dynamics" Iconic Research And Engineering Journals Volume 7 Issue 4 2023 Page 746-758 https://doi.org/10.64388/IREV7I4-1713627
IEEE:
Oksana Anatolyevna Malysheva
"Financial Asset Tokenization and Market Efficiency: Evidence from Liquidity and Pricing Dynamics" Iconic Research And Engineering Journals, 7(4) https://doi.org/10.64388/IREV7I4-1713627
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