The authors utilised the WFE’s new Listing Stringency Index (LSI) to capture the breadth of listing requirements across exchanges and assess how regulatory frameworks shape IPO markets.

Key Findings:

    Exchanges with higher market liquidity and economies with stronger GDP growth see significantly more IPO activity. 
    While more developed financial systems support larger IPO offerings, they do not necessarily lead to more frequent listings, suggesting that institutional depth affects the IPO size rather than the number of IPOs.
    Advanced economies are more sensitive to volatility and macroeconomic conditions, emerging markets benefit most from liquidity enhancement, financial development, and economic growth.
    The cross-market analysis shows that a higher LSI is linked to larger IPOs, although more listing requirements may not directly increase IPO frequency. This suggests that the adoption of stricter requirements acts as a signal of firm quality and investor protection or simply reflects that only larger firms can meet these higher standards.
    When exchanges relaxed their listing rules over time, IPO participation and total capital raised both increased significantly, suggesting that regulatory flexibility can expand access to public markets without undermining investor confidence. 
    The research identifies a sharp but short-lived surge in IPO activity during the global pandemic (2020–2022), driven by exceptional liquidity and policy support during the pandemic recovery. However, this surge did not alter long-term IPO trends, which remain driven by fundamentals such as market liquidity and economic growth.

Policy Implications:

    Liquidity is a key lever for stimulating IPO activity, particularly for SMEs: Policymakers and exchanges should prioritise improving secondary market infrastructure, transparency, and investor participation. 
    The new Listing Stringency Index (LSI) offers a benchmarking tool for regulators: Easing overly restrictive listing rules can increase both participation and capital raised, but reforms must maintain transparency and governance standards to preserve investor trust.
    A one-size-fits-all approach does not work: Emerging markets benefit most from liquidity enhancement and institutional reforms, while advanced markets should focus on mitigating volatility and sustaining investor confidence.
    Link policy to economic growth: As GDP growth is strongly associated with IPO activity, capital market reforms must be integrated with broader macroeconomic and financial development policy.

Dr Pedro Gurrola Perez, Head of Research at the WFE, said, “The research shows that market liquidity and GDP growth are the most consistent and robust factors shaping IPO frequency worldwide, while financial development is associated with larger IPO sizes, particularly in emerging and developing markets.”

Nandini Sukumar, CEO of the WFE, said, “Liquidity is the lifeblood of vibrant public markets. Exchanges and policymakers that invest in transparency, trading infrastructure, and investor confidence are best positioned to attract new listings and support real economic growth. The research also demonstrates that policy levers and regulatory action can be significant drivers of IPOs.”

Read the full Research Paper here