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Can Regional Cross-Listings Accelerate Stock Market Development? Empirical Evidence From Sub-Saharan Africa

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  • International Monetary Fund
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    Abstract

    This study analyzes the impact of regional cross-listing of stocks on the depth of the stock markets in sub-Saharan Africa (SSA). It analyzes data from 1990 to 2007 for a panel of 13 stock markets in SSA countries, only some of which have regional cross-listings. Using event study methodology, the paper finds significant positive effects in measures of stock market depth around regional cross-listing events. Overall, growth in the regional crosslisting of stocks facilitates stock market deepening, and the stock markets of countries with regional cross-listings perform better than those without. The study thus suggests that SSA countries can benefit from putting in place the necessary conditions for promoting regional cross-listings and thereby deepening their stock markets. These include sound legal and regulatory frameworks, macroeconomic and political stability, harmonization of listing rules, accounting laws and disclosure requirements across the region, and strong money markets.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/281.

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    Length: 44
    Date of creation: 01 Dec 2008
    Date of revision:
    Handle: RePEc:imf:imfwpa:08/281

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    Keywords: Stock markets; Sub-Saharan Africa; Money markets; Economic models; stock market; stock market development; stock exchanges; stock exchange; capital market; stock market capitalization; capital markets; bond; international financial statistics; stock market integration; capital market development; domestic credit; financial sector; financial economics; securities exchanges; corporate bonds; capitalization ratio; equity market; bonds; cost of capital; stock prices; stock market liquidity; equity markets; bond markets; stock price; securities exchange; financial liberalization; financial markets; equity capital; capital market integration; capital formation; equity finance; stock market reforms; capital inflows; foreign capital; bourse; capital market performance; capital asset pricing; efficient capital market; firm valuations; financial structure; international financial markets; stock market developments; capital flow; financial market; financial system; local stock markets; stock market liberalizations; financial intermediation; bond market; financial systems; financial sector development; financial services; stock price reactions; securitization; current account deficits; future cash flows; stock returns; cash flows; liquid markets; local stock exchanges; capital flows; capital asset pricing model; equity investment; money market; financial instability; capital asset; local stock market; financial reforms; securities laws; external capital;

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