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A note on how to enhance liquidity in emerging markets by levering on trading participants

Author

Listed:
  • Stefano Alderighi

    (Senior Economist, World Federation of Exchanges. Visiting Research Fellow, University of Essex.)

Abstract

This note reviews the academic and non-academic literature on the relation between stock market participation and liquidity, with a particular focus on emerging markets. The paper concentrates on the three main investor categories considered relevant to enhance stock market liquidity: domestic institutional, retail and international investors. Based on the review of the literature, the paper concludes that to enhance stock market liquidity, emerging markets should avoid domestic institutional concentration, balance retail and institutional participation and gradually liberalise the market to foreign investors.

Suggested Citation

  • Stefano Alderighi, 2017. "A note on how to enhance liquidity in emerging markets by levering on trading participants," Economics Bulletin, AccessEcon, vol. 37(4), pages 2526-2532.
    • Handle: RePEc:ebl:ecbull:eb-17-00648
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    References listed on IDEAS

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    Cited by:

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    3. Alderighi, Stefano & Cleary, Siobhan & Varanasi, Padmasai, 2019. "Do institutional factors influence cross-border portfolio equity flows? New evidence from emerging markets," Journal of International Money and Finance, Elsevier, vol. 99(C).

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    More about this item

    Keywords

    Liquidity; Investor composition; Institutional concentration; Liberalization;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets

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