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Does Cryptocurrency Hurt African Firms?

Author

Listed:
  • Mina Sami

    (Department of Economics, American University in Cairo, New Cairo 11835, Egypt)

  • Wael Abdallah

    (Department of Management, American University in Cairo, New Cairo 11835, Egypt)

Abstract

This paper aimed to assess the effect of the cryptocurrency market on firms’ market value, especially on the sectoral level, in Africa. To reach the study’s main goal, the authors adopted the Panel-Corrected Standard Errors (PCSEs) and Panel Double-Clustered Standard Errors (PDCSEs). Using firm-level data, the results of this study can be summarized as follows: (a) The cryptocurrency market hurts the firm market value in Africa. (b) The firms operating across different sectors respond disproportionally to the cryptocurrency market. For instance, the sectors that offer low returns in Africa (industrial, energy, financial) negatively respond to the cryptocurrency market, while the sectors that offer high returns (real estate and information technology) are not significantly affected. (c) The cryptocurrency market has a perverse effect on less experienced and highly indebted firms. (d) The consistent policies of governments to ban cryptocurrency do not work efficiently.

Suggested Citation

  • Mina Sami & Wael Abdallah, 2022. "Does Cryptocurrency Hurt African Firms?," Risks, MDPI, vol. 10(3), pages 1-17, March.
    • Handle: RePEc:gam:jrisks:v:10:y:2022:i:3:p:53-:d:762049
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    References listed on IDEAS

    as
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    1. Ozili, Peterson K, 2023. "Central bank digital currency and bank earnings management using loan loss provisions," MPRA Paper 116412, University Library of Munich, Germany.
    2. Nicholas Ngepah & Margarida Liandra Andrade da Silva & Charles Shaaba Saba, 2022. "The Impact of Commodity Price Shocks on Banking System Stability in Developing Countries," Economies, MDPI, vol. 10(4), pages 1-23, April.

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