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On the Determinants of Stock Market Development in Africa

In: The Economics of Banking and Finance in Africa

Author

Listed:
  • Charles Komla Delali Adjasi

    (University of Stellenbosch Business School)

  • Jabir Ibrahim Mohammed

    (University for Professional Studies)

  • Joseph Dery Nyeadi

    (SD Dombo University of Business and Integrated Development Studies)

  • Sunil K. Bundoo

    (University of Mauritius)

Abstract

This chapter contributes to the determinants of stock market development in Africa in three ways. These are macroeconomics, institutional quality and natural resource revenues. The study uses panel data for the period 2000–2017 for 15 equity capital markets in Africa. Using panel fixed effect model, the study finds that stock market liquidity, investment and savings are significant and positive determinants of stock market development in Africa. The study finds that banking sector development is a substitute to stock market development instead of a complement. Similarly, we find that strong institutional quality such as control of corruption supports the development of the stock market in Africa. Finally, natural gas rent complements stock market development while forest rent hurts stock market progress in Africa. The study recommends that policies that are good to stimulate stock market liquidity, savings, investment, natural resource management and institutional quality are needed in Africa to boost-up stock market development.

Suggested Citation

  • Charles Komla Delali Adjasi & Jabir Ibrahim Mohammed & Joseph Dery Nyeadi & Sunil K. Bundoo, 2022. "On the Determinants of Stock Market Development in Africa," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Joshua Yindenaba Abor & Charles Komla Delali Adjasi (ed.), The Economics of Banking and Finance in Africa, chapter 0, pages 895-928, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-04162-4_26
    DOI: 10.1007/978-3-031-04162-4_26
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