Monetary Policy and Stock Market Liquidity in Emerging Market Economies

A Literature Review




Monetary policy, stock market liquidity, emerging market economies, impact of monetary policy on liquidity


In the era of globalization, the financial systems of all countries have faced severe challenges and their negative impacts such as overheated economy, high inflation, stock market crash, financial crisis, and other financial collapses. It has raised significant concerns influencing the effects of macroeconomic policies and responses of the financial system of each country all over the world even in normal times and turbulent times in various respects. And stock markets in emerging market economies are no exceptions. Indeed, it is proven by more and more studies that have been implemented to assess stock market liquidity in emerging market economies in different periods and the impacts of certain macroeconomic drivers on monetary policy. This study aimed to systematically review the literature on monetary policy and stock market liquidity measures and how monetary policy affects stock market liquidity. The study summarized the essential findings and approaches in the extant literature. Numerous reputable academic databases were used via a systematic methodology of literature review. Generally, this study sheds light on the crucial macroeconomic role of monetary policy as a potential determinant of stock market liquidity in different timelines. Recommendations and theoretical discussions given by researchers provide an overall review of the relationship between monetary policy and stock market liquidity in emerging market economies.

Author Biography

Uyen Thanh Hoang Ton, Hungarian University of Agricultural and Life Sciences

Corresponding author: Uyen ThanhHOANG TON
Hungarian University of Agriculture and Life Sciences Doctoral School in Management and Organizational Sciences Kaposvár Campus H-7400 Kaposvár, Guba Sándor u. 40.
University of Finance – Marketing Faculty of Finance –Banking
VN-778 Nguyen Kiem, Ward 4, Phu Nhuan District, Ho Chi Minh City
Tel.: +36 70 226 9824


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How to Cite

Hoang Ton, U. T. ., & Tatay, T. (2021). Monetary Policy and Stock Market Liquidity in Emerging Market Economies: A Literature Review. Regional and Business Studies, 13(2), 55–68.