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Enabling stock market development in Africa: A review of the macroeconomic drivers

Uzum, Paul and Ikpefan, Ochei Ailemen and Omankhanlen, A. E and Ejemeyovwi, Jeremiah Ogaga and EHIKIOYA, Benjamin I. (2021) Enabling stock market development in Africa: A review of the macroeconomic drivers. Investment Management and Financial Innovations, 18 (1). pp. 357-364.

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Africa has underdeveloped stock markets that have failed to meet the continent’s capital needs, such as rapid economic growth. This research analyzes the key drivers of stock market development in Africa from a macroeconomic perspective. The study examines several macroeconomic variables, including credit to the private sector, foreign direct investment, external reserves, money supply, external trade, per capita GDP, inflation, and lending rate to explain stock market development in Africa. The study builds a panel data consisting of eight African countries from 1994 to 2018 and applies the pooled mean group estimation technique. The analysis shows that in the long run, credit to the private sector, external reserves, and inflation are the most important factors that influence stock market development, while in the short run, income and trade openness are significant in explaining stock market development in Africa. The study recommends that policies to develop African stock markets should center on developing the private sector through access to credit, increased per capita income, and effective foreign reserve management to boost local and foreign investors’ confidence.

Item Type: Article
Uncontrolled Keywords: private sector credit, African stock markets, trade openness, external reserve, per capita GDP, money supply, lending rate
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Patricia Nwokealisi
Date Deposited: 29 Jun 2021 22:53
Last Modified: 29 Jun 2021 22:53

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