Liquidity and credit risk in the emerging financial markets

In this paper, we examine the relationship between liquidity, liquidity risk and credit risk in emerging sovereign bonds after the subprime crisis period. In our study, we concentrate in the effect of liquidity and credit risk in the problem of liquidity and in the emerging bond market. The presence of control variables, asymmetric information, amount outstanding, coupon, age and interest rate, assist to more explain this relationship. To explain the role of liquidity and credit risk in the problem of liquidity, we use a panel data extracted from Datastream. Our result shows that liquidity risk affect more the problem of liquidity bond market than credit risk.