Contemporary review of stock market liquidity studies in emerging countries

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Abstract

This study presents a review of stock market liquidity in emerging countries. Specifically, it highlights the factors that lead to the occurrence of a liquid market in emerging countries. Following a study by Ding, Ni, and Zhong (2016), this study argues that firms are motivated to have liquid stock to enable them to raise funds at a lower cost, so as to exploit growth opportunities. This paper contributes additional knowledge in terms of understanding stock market liquidity and offers some suggestions for future research. A systematic literature review (SLR) was adopted on stock market liquidity and its related causes and effects, encompassing the years 2010 to 2021. Based on the SLR, it is noted that the features and practices of firms, as well as the policies and regulations that are imposed by regulatory bodies and governments in emerging countries, are important. The limitation of this study is that only four micro-environmental factors and two macro-economic factors were reviewed. Therefore, it is suggested that in the future, researchers should focus on other factors, such as financial performance and political connection. The identification of factors in this study highlighted the gaps in current practices, thus, motivating future research to scrutinise issues relating to stock market liquidity more intensively.

Keywords: Systematic Literature Review, Stock Market Liquidity, Emerging Countries

Authors’ individual contribution: Conceptualization — S.H.; Methodology — S.H.S.J.A. and S.H.; Formal Analysis — S.H.S.J.A.; Writing — Original Draft — S.H.S.J.A. and S.H.; Writing — Review & Editing — A.R.M.H. and S.H.; Supervision — S.H. and M.M.M.; Project Administration — S.H. and A.R.M.H.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: The Authors would like to express their gratitude to the Faculty of Accountancy, Universiti Teknologi MARA, Malaysia, for funding and facilitating this research project.

JEL Classification: B26, H0, P0

Received: 31.01.2022
Accepted: 15.04.2022
Published online: 19.04.2022

How to cite this paper: Abidin, S. H. S. J., Hasnan, S., Marzuki, M. M., & Mohamed Hussain, A. R. (2022). Contemporary review of stock market liquidity studies in emerging countries. Corporate & Business Strategy Review, 3(1), 8–18. https://doi.org/10.22495/cbsrv3i1art1