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Colonialism ties and stock markets: Evidence from Sub-Saharan Africa

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  • Donou-Adonsou, Ficawoyi

Abstract

This paper investigates the relationship among stock markets from the perspective of colonialism in sub-Saharan Africa. I posit that colonialism ties may induce former colonizers to invest more in their former colonies’ stock markets, as they have similar legal systems, accounting standards, and economic systems, among other factors. Using monthly data from 1999 to 2016, I use the cointegration and error-correction model techniques and show that there is a stable, long-run relationship between colonizer and colony stock markets. I also find a long-run relationship between colonizer and non-colony stock markets. This mixed evidence suggests that there may be other motives for investment in Africa.

Suggested Citation

  • Donou-Adonsou, Ficawoyi, 2019. "Colonialism ties and stock markets: Evidence from Sub-Saharan Africa," Research in International Business and Finance, Elsevier, vol. 47(C), pages 327-343.
    • Handle: RePEc:eee:riibaf:v:47:y:2019:i:c:p:327-343
    DOI: 10.1016/j.ribaf.2018.08.007
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    More about this item

    Keywords

    Colonialism; Stock markets; Cointegration; Error correction model; FMOLS;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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