Институционален аспект на пазарната ликвидност в България
Institutional Aspect of Market Liquidity in Bulgaria

Author(s): Krasimira Naydenova
Contributor(s): Dimitar Rafailov (Editor), Yordan Yordanov (Editor)
Subject(s): Economy, Financial Markets
Published by: Е-литера Софт ЕООД
Keywords: market liquidity; institutional approach; market microstructure; national and private institutions; event study
Summary/Abstract: Market liquidity represents the ability of public companies to gather new capital for their long-term and risky projects, as well as investment opportunities - access to quality assets, divestment, market attractiveness. Liquidity and national institutions are proven related, but there is an additional reason to study the institutional influence for Bulgaria - the impact of macro factors is not lasting. Until November 2007, there is a general correlated growth, but after the relation weakens, so traditional factors cannot explain the change. According to this, the analysis focuses on institutions - rules, policies and market infrastructure that directly determine investment environment and market attractiveness. The institutional impact is proved serious and allows conclusions. The market is overregulated – harmonizing beyond the property rights is "too much of a good thing". The transaction costs are high and together with overregulation cause “bilateral restriction of access”. The phenomenon is critically negative, leading to a collapse of the active market participants. The market infrastructure does not allow for a quality investment process - it is asymmetrical - a reason for ballooning, and slow recovery. Supervisory institutions allow failures - regulatory due to complicated rules, and institutional – the selective implementation. Market-mobilized capital is low - a problem for Bulgarian business. The Bulgarian stock market needs complex institutional attention, aimed both at simplifying rules, reducing transaction costs, and attracting investment interest. Only the government and regulators can carry out these important activities. Private institutions can help, but they cannot be the real drivers of necessary change.

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