Stock liquidity and ownership structure during and after the 2008 Global Financial Crisis: Empirical evidence from an emerging market

• Published in: Emerging markets review 2018-12, Vol.37, p.114-133
• Main Authors: Tran, Ly Thi Hai, Hoang, Thao Thi Phuong, Tran, Hoa Xuan
• Format: Article
• Language: English
• Subjects: Emerging market; Financial crisis; Ownership; Stock liquidity
• ISSN: 1566-0141; 1873-6173
• DOI: 10.1016/j.ememar.2018.07.001

This paper examines the impact of ownership structure, whether state owned, foreign owned or institutionally owned, on Vietnamese stock market liquidity in different market conditions. We find that state ownership is associated with lower liquidity after the 2008 financial crisis. Institutional ownership shows a weak influence on liquidity in the post-crisis period. During the financial crisis, however, liquidity declines could not be attributed to ownership structure. Our results imply that foreign investors have not yet played a significant role in driving stock market liquidity in Vietnam, which is counter to findings in the existing literature concerning liquidity in more developed markets. Our results are consistent across conventional liquidity measures and a composite liquidity measure. •The paper studies the impact of ownership structure on stock liquidity.•State ownership is associated with lower liquidity after the 2008 financial crisis.•Institutional ownership weakly influences liquidity in the post-crisis period.•Foreign investors have not yet played a significant role in driving stock liquidity.•Liquidity declines during the crisis could not be attributed to ownership structure.