Linkages between Exchange Traded Funds and EU Stock Market Liquidity

19 Pages Posted: 18 Apr 2019

Date Written: March 20, 2019

Abstract

The paper analyses the impact of Exchange Traded Funds (ETFs) on the liquidity of stock exchanges in the European Union. The liquidity of stock exchanges is a complex phenomenon that is influenced by a number of economic and political factors, and a number of models such as the average daily volumes have been developed to explain the aspect of liquidity. The paper provides more information regarding the economic factors influencing liquidity, by analysing the existing literature and data regarding the stock exchange market in the European Union. The trading volumes and importance of ETFs cannot be understated since the indices of the stock market cannot be traded. The ETFs track, and to some extent, replicate the performance of specific indices in the stock market.

Keywords: Exchange Traded Funds, Liquidity, Stock exchanges, Volatility, EU

JEL Classification: G12, G15

Suggested Citation

Pedisic, Roko, Linkages between Exchange Traded Funds and EU Stock Market Liquidity (March 20, 2019). Available at SSRN: https://ssrn.com/abstract=3357018 or http://dx.doi.org/10.2139/ssrn.3357018

Roko Pedisic (Contact Author)

Single Resolution Board ( email )

Brussels, 1000

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