Abstract

AGUDELO RUEDA, Diego Alonso. Colombian stock market liquidity: how much have we advanced in the past ten years?. Cuad. Adm. [online]. 2010, vol.23, n.40, pp.239-269. ISSN 0120-3592.

This article discusses the substantial progress of the Colombian stock market in terms of liquidity in the past ten years. That progress has been manifested by an important drop in the supply and demand margins during the period for most of the stocks and for the market average. It gives evidence that the merger of the three stock exchanges (Bolsa de Bogotá, Bolsa de Medellín, and Bolsa de Occidente), which led to the birth of Bolsa de Valores de Colombia on July 3, 2001, is associated with increased liquidity for a representative group of stocks. The study also explores the determinants for the liquidity of the stock market and its regularities. Among other findings, liquidity increases when there are more returns and a greater number of operations and liquidity decreases when there is volatility and financial crises in the market and in individual stocks. Possible explanations for said relations are discussed referring to the literature on the topic and to stakeholder opinions.

Keywords : liquidity; stock market; stock exchange; microstructure of markets.

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