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Bond Markets in Africa

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Author Info

  • Yibin Mu
  • Peter Phelps
  • Janet Gale Stotsky
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    Abstract

    African bond markets have been steadily growing in recent years, but nonetheless remain undeveloped. African countries would benefit from greater access to financing and deeper financial markets. This paper compiles a unique set of data on corporate bond markets in Africa. It then applies an econometric model to analyze the key determinants of African government securities market and corporate bond market capitalization. Government securities market capitalization is directly related to better institutions and interest rate volatility, and inversely related to the fiscal balance, higher interest rate spreads, exchange rate volatility, and current and capital account openness. Corporate bond market capitalization is directly linked to economic size, the level of development of the economy and financial markets, better institutions, and interest rate volatility, and inversely related to higher interest rate spreads and current account openness. Policy implications follow.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 13/12.

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    Length: 53
    Date of creation: 14 Jan 2013
    Date of revision:
    Handle: RePEc:imf:imfwpa:13/12

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    Postal: International Monetary Fund, Washington, DC USA
    Phone: (202) 623-7000
    Fax: (202) 623-4661
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    Web page: http://www.imf.org/external/pubind.htm
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    Web: http://www.imf.org/external/pubs/pubs/ord_info.htm

    Related research

    Keywords: Bond markets; Africa; Corporate sector; Cross country analysis; Economic models; African bond markets; corporate bonds; government securities; bond market capitalization; corporate bond market; bond market development; corporate bond markets; stock exchange; private bond; government bond; local currency bond; financial markets; public bond; debt stock; local currency bond markets; government bond market; financial system; government bond markets; nominal exchange rate; government bonds; financial bonds; financial institutions; private bonds; domestic bond; sovereign bonds; financial sector; debt stocks; corporate bond market development; financial systems; public bonds; financial sector development; stock exchanges; domestic bond markets; public debt stock; bond market capitalizations; global bond; international financial statistics; demand for bonds; stock markets; liquid markets; portfolio investment; global bond markets; bond issuance;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Mahmood Pradhan & Shanaka J. Peiris & Mangal Goswami & Dulani Seneviratne & Joshua Felman & Andreas Jobst & Simon Gray, 2011. "Asean Bond Market Development," IMF Working Papers 11/137, International Monetary Fund.
    2. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
    3. Breusch, T.S. & Pagan, A.R., . "The Lagrange multiplier test and its applications to model specification in econometrics," CORE Discussion Papers RP -412, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
    5. John D. Burger & Francis E. Warnock, 2006. "Foreign Participation in Local Currency Bond Markets," NBER Working Papers 12548, National Bureau of Economic Research, Inc.
    6. S M Ali Abbas & Jakob E Christensen, 2010. "The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-Income Countries and Emerging Markets," IMF Staff Papers, Palgrave Macmillan, vol. 57(1), pages 209-255, April.
    7. John D. Burger & Francis E. Warnock, 2006. "Local Currency Bond Markets," NBER Working Papers 12552, National Bureau of Economic Research, Inc.
    8. Barry Eichengreen & Pipat Luengnaruemitchai, 2004. "Why Doesn't Asia Have Bigger Bond Markets?," NBER Working Papers 10576, National Bureau of Economic Research, Inc.
    9. Mame Astou Diouf & Francois Boutin-Dufresne, 2012. "Financing Growth in the WAEMU Through the Regional Securities Market," IMF Working Papers 12/249, International Monetary Fund.
    10. Simon Gray & Andreas Jobst & Joshua Felman & Ana Carvajal, 2011. "Developing Asean5 Bond Markets," IMF Working Papers 11/135, International Monetary Fund.
    11. Sandrine Kablan, 2009. "Banking Efficiency and Financial Development in Sub-Saharan Africa (SSA)," The African Finance Journal, Africagrowth Institute, vol. 11(2), pages 28-50.
    12. Russ, Katheryn N. & Valderrama, Diego, 2012. "A theory of bank versus bond finance and intra-industry reallocation," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 652-673.
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    Cited by:
    1. Klein, Christian & Stellner, Christoph, 2014. "Does sovereign risk matter? New evidence from eurozone corporate bond ratings and zero-volatility spreads," Review of Financial Economics, Elsevier, vol. 23(2), pages 64-74.
    2. 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).

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