Listing and the liquidity of bank stocks: revisited

Donald Fraser, John Groth () and Steven Byers

Applied Financial Economics, 1997, vol. 7, issue 2, 165-172

Abstract: This paper investigates the association between listing and liquidity over the January 1991-December 1994 period for a large number of bank stocks. An empirical model is developed in which liquidity (using a measure that reflects the volume-price effects of demand and supply in market price) is a function of listing and certain other (ceteris paribus) variables. The model is virtually identical to the one employed in the previous study of the topic. The empirical results of the current study are compared to those of the prior one. Despite enormous changes in the structure of the financial system and in the banking system, the empirical results are consistent with those of the prior study: listed bank stocks do not appear to have greater liquidity than unlisted bank stocks. In fact, the results suggest that listing adversely affects liquidity. Various potential reasons for this finding are presented in the paper.

Date: 1997
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DOI: 10.1080/096031097333727

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