Global Liquidity– A Review of Concepts, Measurement, and Effect on Asset Prices : An Empirical Analysis of the Impact on the Indian Stock Market
In a world with high international capital mobility and a well developed financial system, official sources of liquidity have come to interact with private ones and exacerbate them in various ways. Global cross-border credit, a measure which goes beyond liquidity provided by central banks to capture the outcomes of the interaction between official and private sources of liquidity and the interaction between domestic and international sources of liquidity, is examined in this Chapter to understand the effects of QE, and surplus liquidity generated there from, on emerging economy stock markets like India’s and gauge the possibilities of financial market vulnerabilities. The results indicate that the Indian stock market movements may not be totally independent of changes in global liquidity