# What are the most effective market variables to measure liquidity/illiquidity in the market?

I'm trying to find/create a variable that measures liquidity in financial markets in order to assess, for instance whether credit conditions tightened? Does anyone know any relevant literature concerning this subject?

Turnover ratio (TR) is one of the variables used. $TR_t=\frac{Total_. shares_. traded_. at_. time_. t}{Market_. capitalisation}$. This variable indicates the number of shares traded in a day. Liquidity is a tricky area and you will find various measures in various papers according the authors preference. I do not recommend directly using volume or market cap. These variables does not give relative comparison.