Empirical Research on the Relationship between the Liquidity Level and the Trading Volume of Rubber Futures

The level of liquidity is a very important factor concerning the smooth operation of the futures market. The paper has taken M₂, the broad money supply, as the index of the level of liquidity, and used the data of natural rubber futures, examined the long-term and dynamic relationship between the trading volume of rubber futures and the broad money supply. The result shows that the long-run equilibrium relationship between the trading volume of rubber futures and the broad money supply is stable. There is a one-way causality relationship running from the broad money supply to the trading volume of rubber futures between them. This proves that the level of liquidity is one of the reasons causing the trading volume of rubber futures to increase constantly.