IDEAS home Printed from
   My bibliography  Save this article

The New Wave of Liquidity: Impact of Friction




On the fourth anniversary of the original paper by Shojai and Hahn we will look at whether any of the predictions made in that article have come true. The authors suggested that revolutionary technologies, such as the Internet and wireless devices, would over time make it possible to derive value from previously less liquid or even unrecognized assets, and that the aggregate effect of such value liberation would be "a new wave of liquidity, which will engulf the global economy and result in substantial increases in liquidity around the world." They further suggested that for this value liberation to take place, each of these previously illiquid, and in certain circumstances even unrecognized, assets would need to go through a four-step process: reduction in friction, value release, asset pricing, and asset recognition. We find in this paper that while a number of these predictions have come true, the degree of transformation that was envisioned in the original article are still far from becoming a reality.

Suggested Citation

  • Shojai, Shahin & Wang, Samuel, 2005. "The New Wave of Liquidity: Impact of Friction," Journal of Financial Transformation, Capco Institute, vol. 14, pages 51-59.
  • Handle: RePEc:ris:jofitr:0009

    Download full text from publisher

    File URL:
    File Function: Full text
    Download Restriction: no

    More about this item


    New sources of liquidity; New models of capital creation; market frictions; auction models; asset pricing; asset recognition;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:jofitr:0009. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Shahin Shojai). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.