Stock Market Liquidity in Chile
30 Pages Posted: 16 Dec 2016
Date Written: November 2016
Chile has a large but relatively illiquid stock market. Global factors such as global risk appetite and monetary policy in advanced economies are key cyclical determinants of liquidity in Chilean equities. Evidence from a cross-section of emerging markets suggests strong protection of minority shareholders can help improve stock market liquitidity. Currently, illiquid in Chilean may have to pay 3 1/2 percent more as cost of equity. Corporate governance should be improved, namely through the adoption of a stewardship code.
Keywords: Stock markets, Chile, Liquidity, Business cycles, Corporate governance, Emerging markets, Cross country analysis, Panel analysis, Market liquidity; investor protection; corporate governance; liquidity premium.
JEL Classification: G12, G15, G23, G34
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