The Liquidity of the London Capital Markets, 1825–70†

30 Pages Posted: 13 Jul 2018

See all articles by Gareth Campbell

Gareth Campbell

Queen's University Belfast - Queen's Management School; Queen's University Belfast

John D. Turner

Queen's University Belfast; Queen's University Belfast - Queen's Management School

Qing Ye

Xi'an Jiaotong-Liverpool University (XJTLU) - International Business School Suzhou

Date Written: August 2018

Abstract

This article examines the liquidity of the London capital markets in the decades following the liberalization of UK incorporation law. Using comprehensive stock and bond data, we calculate a measure of market liquidity for the period 1825–70. We find that stock market liquidity trended upwards but bond market liquidity did not increase over the sample period. Stock market liquidity during our sample period was partially influenced by the bond market, rather than fluctuations in economic output. In our analysis of the cross‐sectional determinants of individual stock liquidity, we find that firm size and the number of issued shares were important determinants of liquidity.  Finally, we find little evidence of an illiquidity premium, which is consistent with the view that investors did not price liquidity in this nascent market.

Suggested Citation

Campbell, Gareth and Turner, John D. and Ye, Qing, The Liquidity of the London Capital Markets, 1825–70† (August 2018). The Economic History Review, Vol. 71, Issue 3, pp. 823-852, 2018. Available at SSRN: https://ssrn.com/abstract=3212413 or http://dx.doi.org/10.1111/ehr.12530

Gareth Campbell (Contact Author)

Queen's University Belfast - Queen's Management School

Riddel Hall
185 Stranmillis Road
Belfast, BT9 5EE
United Kingdom

Queen's University Belfast ( email )

Riddel Hall
185 Stranmillis Road
Belfast, BT9 5EE
United Kingdom

John D. Turner

Queen's University Belfast ( email )

David Leir Building
Belfast BT7 1NN, BT9 5AG
Ireland

Queen's University Belfast - Queen's Management School

Riddel Hall
185 Stranmillis Road
Belfast, BT9 5EE
United Kingdom

Qing Ye

Xi'an Jiaotong-Liverpool University (XJTLU) - International Business School Suzhou ( email )

111 Ren'ai Road
Suzhou Industrial Park
Suzhou, Jiangsu 215123
China

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