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Do stock markets matter in investment growth in Africa?

Author

Listed:
  • Charles K.D. Adjasi
  • Nicholas Biekpe

    (University of Ghana, Ghana
    University of Stellenbosch, South Africa)

Abstract

The paper investigates the effect of stock market prices on investment growth using dynamic panel data analysis of selected African countries. In line with theoretical expectations investment responds positively to increases in stock prices. Further analysis based on interaction terms reveals that the sensitivity of investment to stock prices increases with stock market development. The paper also finds that even without the inclusion of the most sophisticated market-South Africa, the positive relationship between investment and stock market prices continues to exist in the smaller markets. The findings underscore the importance of stock markets to investment formation in Africa.

Suggested Citation

  • Charles K.D. Adjasi & Nicholas Biekpe, 2009. "Do stock markets matter in investment growth in Africa?," Journal of Developing Areas, Tennessee State University, College of Business, vol. 43(1), pages 109-120, September.
    • Handle: RePEc:jda:journl:vol.43:year:2009:issue1:pp:109-120
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    Citations

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    Cited by:

    1. Shweta Ahalawat & Archana Patro, 2019. "Does spot Nifty fluctuate with macroeconomic indicators?," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 9(7), pages 175-187, July.
    2. Hana Bawazir & Mukesh Kumar & Saban Celik & Khadija Abdulredha Abdulla & Bora Aktan, 2020. "The interdependence between stock market development and economic growth: a multi-country examination," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 38(2), pages 619-652.
    3. Albert Olusanmi ILUGBEMI & Festus Olumide FAWEHINMI, 2020. "Impacts of Oil Price Volatility and Monetary Policy on Economic Performance Of Non-Oil Producing Countries in Africa," Business & Management Compass, University of Economics Varna, issue 2, pages 180-197.

    More about this item

    Keywords

    Stock market returns; investment-growth; dynamic panel; Africa;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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