Vinsamlegast notið þetta auðkenni þegar þið vitnið til verksins eða tengið í það: http://hdl.handle.net/1946/3587
In this study we examine the relationship between trading volumes and volatility in the Icelandic foreign exchange interbank market using a data set spanning more than seven years. We review the theoretical and empirical literature on the relationship between trading volumes and volatility and discuss the econometric methodology employed. Theory predicts that trading volumes and volatility are positively correlated and a large number of empirical studies from a variety of different market settings have found this to be the case. The results of this study indicate that this is also holds true for the Icelandic interbank market. Furthermore, we ﬁnd that the relationship is stronger in times of high volatility than low volatility.