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

2021 ◽  
Vol 18 (1) ◽  
pp. 357-364
Author(s):  
Paul Uzum ◽  
Ailemen Ochei Ikpefan ◽  
Alexander Ehimare Omankhanlen ◽  
Jeremiah Ogaga Ejemeyovwi ◽  
Benjamin Ighodalo Ehikioya
Keyword(s):  
Stock Market ◽  
Private Sector ◽  
Stock Markets ◽  
Trade Openness ◽  
Market Development ◽  
External Trade ◽  
African Countries ◽  
Stock Market Development ◽  
Access To Credit ◽  
Per Capita

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.

scholarly journals The macroeconomic drivers of stock market development: evidence from Hong Kong

2019 ◽  
Vol 12 (2) ◽  
pp. 185-207 ◽  
Author(s):  
Sin-Yu Ho ◽  
Nicholas M. Odhiambo
Keyword(s):  
Hong Kong ◽  
Stock Market ◽  
Inflation Rate ◽  
Banking Sector ◽  
Trade Openness ◽  
Market Development ◽  
Content Type ◽  
Stock Market Development ◽  
Banking Sector Development ◽  
Short Run

Purpose The purpose of this paper is to examine the macroeconomic drivers of stock market development in Hong Kong during the period 1992Q4-2016Q3. Specifically, it investigates the impact of banking sector development, economic growth, inflation rate, exchange rate, trade openness and stock market liquidity on stock market development. Design/methodology/approach This paper uses quarterly time-series data covering the period 1992Q4-2016Q3, which have been obtained from various reliable sources. The study uses the autoregressive distributed lag bounds testing procedure to identify both the long- and short-run macroeconomic drivers of stock market development in Hong Kong. Findings We find that banking sector development and economic growth have positive impacts on stock market development, whereas the inflation rate and the exchange rate have negative impacts on stock market development both in the long and short run. In addition, the results show that trade openness has a positive long-run impact but a negative short-run impact on stock market development. Originality/value Despite the phenomenal growth of stock market in Hong Kong, there are, to the best of the authors’ knowledge, no relevant studies on the macroeconomic drivers of stock market development in Hong Kong. Therefore, this paper endeavours to enrich the literature by examining the macroeconomic drivers of stock market development in Hong Kong during the period 1992Q4-2016Q3.

scholarly journals THE IMPACT OF DEPOSITARY RECEIPTS ON STOCK MARKET DEVELOPMENT: EVIDENCE FROM ORGANIZATION OF ISLAMIC COOPERATION STOCK MARKETS

2020 ◽  
Vol 10 (3) ◽  
pp. 130-138
Author(s):  
Norhazlina Ibrahim ◽  
Obiyathulla Ismath Bacha ◽  
Mansor H. Ibrahim ◽  
Hishamuddin Abdul Wahab
Keyword(s):  
Stock Market ◽  
Stock Markets ◽  
Market Development ◽  
Stock Market Development ◽  
Depositary Receipts ◽  
The Impact

scholarly journals Are Banks And Stock Markets Positively Related? Empirical Evidence From South Africa

2010 ◽  
Vol 26 (6) ◽  
Author(s):  
Nicholas M Odhiambo
Keyword(s):  
South Africa ◽  
Stock Market ◽  
Stock Markets ◽  
Real Income ◽  
Market Development ◽  
Bounds Testing ◽  
Critical Question ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><a name="OLE_LINK2"></a><a name="OLE_LINK1"><span style="mso-bookmark: OLE_LINK2;"><span style="color: black; font-size: 10pt; mso-themecolor: text1;" lang="EN-GB"><span style="font-family: Times New Roman;">In this study, we examine the relationship between banks and stock market development in South Africa.<span style="mso-spacerun: yes;">&nbsp; </span>The study attempts to answer one critical question: Are banks and stock markets positively related in South Africa? The bank development is proxied by the ratio of the domestic credit to the private sector to GDP (DCP/GDP), while the stock market development is proxied by the ratio of the stock market capitalisation to GDP (CAP/GDP).Unlike the majority of the previous studies, the current study uses the newly introduced ARDL-Bounds testing approach, as proposed by Pesaran<span style="mso-spacerun: yes;">&nbsp; </span>et al. (2001), to examine this linkage. The empirical results show that there is a distinct positive relationship between banks and stock markets in South Africa. The results apply irrespective of whether the model is estimated in the short run or in the long run. <span style="mso-bidi-font-style: italic;">Other results show that in the short run, the stock market development in South Africa is positively determined by the level of savings, but negatively affected by the rate of inflation and the lagged values of the stock market development. However, in the long run, the stock market is positively determined by real income and the inflation rate. </span><span style="mso-spacerun: yes;">&nbsp;</span></span></span></span></a></p>

Do stock market and banking sectors development promote innovation efficiency?

2018 ◽  
Vol 14 (5) ◽  
pp. 506-521
Author(s):  
Soo-Wah Low ◽  
Ali Albada ◽  
Nurhatiah Ahmad Chukari ◽  
Noor Azlan Ghazali
Keyword(s):  
Stock Market ◽  
Stock Markets ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
World Intellectual Property Organization ◽  
Market Development ◽  
Content Type ◽  
Stock Market Development ◽  
Innovation Output ◽  
Developed Stock Markets

Purpose The purpose of this paper is to investigate the impacts of stock market and banking sectors development on a country’s efficiency in transforming its innovation input into output. Design/methodology/approach This study employs a generalized method-of-moments panel estimator to examine the role of stock market and banking development in influencing innovation efficiency. Findings Findings show that a country’s stock market development is positively related to its innovation efficiency ratio. Countries with more developed stock markets have relatively higher efficiency in transforming innovation input into innovation output than those with less developed stock markets. There is no evidence that innovation efficiency is influenced by banking sector development. However, when stock market and banking sectors are modeled together, while stock market development retains its positive influence, the findings indicate that banking sector exerts negative impact on innovation efficiency. Practical implications The findings provide useful insights to guide policy decisions for a country’s innovation agenda in enhancing its innovation performance. The findings imply that stock market development should be embraced as one of the key policy areas in order for a country to be more efficient in transforming its innovation input into innovation output. Originality/value This paper provides first evidence using data sourced from Global Innovation Index report, first available in 2007 and published by Cornell University, INSEAD and the World Intellectual Property Organization.

scholarly journals Economic Growth and the Development of Financial Markets: Some African Evidence

2013 ◽  
Vol 1 (2) ◽  
pp. 1-25
Author(s):  
Félix Zogning Nguimeya ◽  
Gaétan Breton
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Financial Markets ◽  
Significant Relationship ◽  
Stock Markets ◽  
Market Development ◽  
Stock Market Development ◽  
The Real ◽  
Development Indicators ◽  
Causality Tests

The purpose of this study is to determine if African stock markets have contributed to a better allocation of savings and economic growth in the countries in question. Our results reveal a strong and significant relationship between aggregate economic growth and stock market development indicators. Causality tests indicate that the real sphere involves the financial sphere for relatively new markets.

Stock Market Development in Ghana: Whither Trade Openness

2018 ◽  
Vol 9 (4) ◽  
pp. 135-141
Author(s):  
Raphael Awiagah ◽  
◽  
Sungsup Brian Choi
Keyword(s):  
Stock Market ◽  
Trade Openness ◽  
Market Development ◽  
Stock Market Development

scholarly journals The nexus between stock market development and economic growth

2016 ◽  
Vol 14 (1) ◽  
pp. 269-277
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Gdp Per Capita ◽  
Market Development ◽  
Stock Market Development ◽  
Real Gdp ◽  
Real Gdp Per Capita ◽  
Short Run ◽  
Per Capita ◽  
The Relationship

The study investigated the relationship between stock market development and economic growth in Belgium using ARDL approach with annual time series data from 1988 to 2012. Real GDP per capita was used as a proxy for economic growth and stock market capitalization as a ratio of GDP as an approximate measure of stock market development. The relationship between stock market development and economic growth falls into four categories which are (1) stock market-led economic growth, (2) economic growth-led stock market development, (3) feedback effect and (4) neutrality hypothesis where the relationship between the two variables does not exist. Despite the existence of these four views on the relationship between stock market and economic growth, it appears from the literature review done by the author that majority of the empirical evidence support the stock market-led economic growth view. The fact that the topic on the directional causality between stock market and economic growth is still inconclusive is the major motivating factor why the author chose to investigate the relationship between the two variables in Belgium. The study observed that there exist an insignificant long run causality running from stock market development towards economic growth in Belgium. This relationship was not detected in the short run. Moreover, the reverse causality from real GDP per capita to stock market capitalization both in the long and short run was not detected in Belgium. These results are at variance with the majority of the empirical findings reviewed earlier on. It could possibly be that certain conditions that are necessary to enable stock market to significantly positively influence economic growth were not in place in Belgium. Therefore, the study urges the Belgium authorities to put in place the right environment, policies and programmes that enable the stock market to play its role of stimulating economic growth.

scholarly journals RELATIONSHIP BETWEEN THE STOCK MARKET DEVELOPMENT, BANKING SECTOR DEVELOPMENT AND ECONOMIC GROWTH IN THE CEE COUNTRIES

2021 ◽  
Vol 7 (3) ◽  
pp. 118-126
Author(s):  
Lidiya Yemelyanova
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Stock Markets ◽  
Banking Sector ◽  
Market Development ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Banking Sector Development ◽  
The Impact ◽  
Stock Market Capitalization

The stock markets of most CEE countries have been actively developing and improving over the past decades but they still do not belong to the developed markets according to MSCI classification, the financial systems of these countries tends towards the bank-oriented type. Does the level of stock market development affect economic growth in CEE countries and do these countries need to develop their stock markets accordingly? The purpose of this article is to identify the direction of the causal link between stock market development, banking sector development and economic growth in Central and Eastern European (CEE) countries. The subject of the research is the relationship between the stock market development, banking sector development and economic growth in the CEE countries. Methodology. The research is based on the annual data for two time periods 1999-2012 and 1999-2015 for the 8 and 5 CEE countries, respectively. The study is based on the Granger causality test and linear regression models. According to results of the research the stock market development plays an important role in attracting foreign direct investment and economic growth in CEE countries in the long-run period. There are revealed the channels of indirect influence of the stock market capitalization on the economic growth. Stock market capitalization has impact on the banking sector and gross capital formation, which in turn have impact on the economic growth of CEE countries. There is the impact of both the stock market and the banking sector development on the economic growth in CEE countries during 1999-2015. However, the impact of the stock market size on the economic growth is positive and the impact of domestic credit to private sector is negative. Practical implications. The study proves the reasonable need for the CEE countries to move towards further development of the stock market, improving the market infrastructure and institutional environment in order to expand the size of the stock market and thereby contribute to the economic growth of this countries. Value/originality. The obtained conclusion about the role of the stock market in economic growth and attraction of FDI is of great importance both for Ukraine and other countries with similar trajectory of economic development in general and similar historical aspects of the origin of stock markets in particular and should be taken into account by state leaders when making decisions on the need to create conditions for development of such element of the country’s financial system as the stock market.

scholarly journals The Role of FDI on Stock Market Development: The Case of Pakistan

2012 ◽  
Vol 4 (1) ◽  
pp. 26-33 ◽  
Author(s):  
Ali Raza ◽  
Zeshan Ahmed . ◽  
Mohammad Ahmed . ◽  
Tanvir Ahmed .
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Stock Market ◽  
Stock Markets ◽  
Direct Investment ◽  
Market Development ◽  
Political Environment ◽  
Stock Market Development ◽  
Domestic Savings

The purpose of this study is to empirically analyze the role of foreign direct investment in developing host country’s stock markets and to examine whether they are related or not. The key interest turns around the admiring role of FDI in Stock market development of Pakistan. Our work also aims to investigate the effect of foreign direct investment along with domestic savings, exchange rate and inflation in developing Pakistan stock markets in a rapidly changing political environment. This study applies Ordinary Least Square (OLS) method of regression by using annual time series data for the period 1988-2009 in case of Pakistan to estimate empirical relationships among variables. The results disclose a positive impact of foreign direct investment along with other explanatory variables in developing Stock markets of Pakistan. The study findings can be used to help government policy makers to encourage FDI and take various steps to provide incentives and save foreign investors interest in a volatile political environment that prevailing in the country. Adequate facility of infrastructure can enhance FDI. The volatility of exchange rate and inflation rate should also be minimized through monitory policy while domestic savings must also be encouraged in the country through appropriate and encouraging saving policies. Our effort exclusively study development of Stock markets in Pakistan with special reference to foreign direct investment and other variables. Our study depicts a closer relationship between FDI and Stock Market Development.

Sign in / Sign up

Export Citation Format

Share Document