Does the Introduction of Stock Exchange Markets BoostEconomic Growth in African Countries?

We assess whether the introduction of private equity capital markets effects economic growth in African countries. We address this issue by focussing on stock exchange markets as the predominant type of new equity markets,using a Diff-in-Diffregressionmethod.The analysis uses a panel data set from48 Sub-Saharan countries over the time range of 1970-2018.23 countries are part of the “treated” group–which introduced international stock exchanges–and 25 “untreated” countries serve as the control group. Our results show that when compared with the time period priortothe introduction of stock exchange markets, GDP per capita rises by the amount of 532US$ (around 40% of the Sub-Saharan average) after theintroduction of equity capital markets inthe treated countries.Overthe tenyears post introduction, the effect is hump-shaped, with effects becoming statistically significant from the first year after implementation, with a peak in Year 5, and it then becomes statistically insignificant from then onwards.