What happened to liquidity when world war I shut the NYSE?

• 成果类型: Article
• 署名作者: Silber, WL
• 署名单位: New York University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2005.02.005
• 发表日期: 2005
• 页码: 685-701
• 关键词: liquidity; financial innovation; NYSE; circuit breakers World War I

摘要

This paper examines how financial markets responded to the longest circuit breaker in American financial history: the four-month suspension of trading on the New York Stock Exchange following the outbreak of World War I. The suspension that began on July 31, 1914 fostered a substitute trading forum called the New Street market. Trading on New Street began almost immediately and offered economically meaningful liquidity services despite its impaired price transparency. A simple cross-sectional model of bid-ask spreads on New Street demonstrates that New Street liquidity responded to economic incentives. New Street's success implies that, from a public policy perspective, expensive back-up trading facilities are not required to preserve liquidity during a trading suspension in established markets. Back-up records of share ownership and transfer facilities, however, are crucial to maintaining liquidity. (c) 2005 Published by Elsevier B.V.