Local Business Cycles and Local Liquidity

• Main Authors: BERNILE, Gennaro, Korniotis, George, Kumar, Alok, WANG, Qin
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: Market segmentation; liquidity; local bias; local business cycles; capital constraints; institutional investors; return predictability; Corporate Finance; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/3666; https://ink.library.smu.edu.sg/context/lkcsb_research/article/4665/viewcontent/LocalBusinessCyclesLocalLiquidity_afv.pdf
• Institution: Singapore Management University

This study examines whether state-level economic conditions affect the liquidity of local firms. We find that liquidity levels of local stocks are higher (lower) when the local economy has performed well (poorly). This relation is stronger when local financing constraints are more binding, the local...