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What Determines Bond Market Development in Sub-Saharan Africa?

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Author Info

  • Olatundun Janet Adelegan
  • Bozena Radzewicz-Bak
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    Abstract

    This study empirically analyzes the determinants of bond market development in a cross section of 23 sub-Saharan African (SSA) countries between 1990 and 2008. It considers the stage of development and the size of the bond market, as well as the historical, structural, institutional and macroeconomic factors driving bond market development in SSA. The study finds that the savings constraint is a key impediment to domestic bond markets development as well as financial market deepening, as it results in a low level of financial intermediation by the banks. Overall, the results show that a confluence of factors matters for the development of domestic bond markets in SSA; these include structure of the economy, investment profile, law and order, size of the banking sector, the level of economic development, and various macroeconomic factors. Policy implications include increased efforts to strengthen the investment environment and the need for a regional approach to bond market development.

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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=23314
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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/213.

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    Length: 33
    Date of creation: 01 Sep 2009
    Date of revision:
    Handle: RePEc:imf:imfwpa:09/213

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    Web page: http://www.imf.org/external/pubind.htm
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    Related research

    Keywords: Sub-Saharan Africa; Access to capital markets; Banking sector; External debt; Financial institutions; Financial systems; Nonbank financial sector; Public debt; Savings; bond; bond market; bond market development; domestic debt; debt market; domestic bond; bond markets; bonds; domestic bond market; financial sector; private debt; domestic bond markets; stock market; financial market; domestic debt market; government debt; government bonds; domestic bond market development; stock market capitalization; crowding out; domestic bonds; domestic savings; bond market capitalization; financial intermediation; external finance; budget balance; current account; debt relief; development of domestic bond; international financial statistics; liquid bond market; budget balances; government bond; corporate bond; current account balances; financial system; corporate bonds; domestic borrowing; external financing; government bond market; domestic debt markets; financial services; international country risk guide; external debts; financial market development; corporate bond market; government bond markets; public sector bond; interest rate policy; municipal bond; demand for bonds; development of bond market; development of bond markets; global bond; debt sustainability; domestic currency; debt management strategies; financial reforms; stock market development; developing government bond; nominal interest rate; financial markets; capital account liberalization; external indebtedness; long-term bonds; developing government bond market; currency debt; current account deficits; bilateral loans; multilateral debt; debt relief initiative; domestic government bonds; financial repression; local bond; external funding; term bonds; regional bond markets; local bond market; multilateral debt relief; international standards; financial stability; debt management; bilateral debt; debt situation; global bond markets;

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    Cited by:
    1. Essers, Dennis & Cassimon, Danny, 2013. "And what about Africa's original sins?," IOB Analyses & Policy Briefs 1, Universiteit Antwerpen, Institute of Development Policy and Management (IOB).
    2. Chauvin, S. & Golitin, V., 2010. "Borrowing requirements and external debt sustainability of Sub-Saharan African countries," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 17, pages 47-77, Spring.
    3. Essers, Dennis & Cassimon, Danny, 2012. "Washing away original sin: vulnerability to crisis and the role of local currency bonds in Sub-Saharan Africa," IOB Working Papers 2012.12, Universiteit Antwerpen, Institute of Development Policy and Management (IOB).

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