Stock Market Development and Economic Growth

Stock Market Development and Economic Growth

This study empirically explored the short run and long run relationship between stock market development and economic growth by comparing two leading emerging economies in Africa: Nigeria and South Africa from 1981 to 2015.

Author: Charity Ifunanya Osakwe

Publisher:

ISBN: OCLC:1305013776

Category:

Page: 15

View: 887

This study empirically explored the short run and long run relationship between stock market development and economic growth by comparing two leading emerging economies in Africa: Nigeria and South Africa from 1981 to 2015. Growth rate of gross domestic product was used to measure economic growth, while stock market development was surrogated by market capitalization ratio to gross domestic product and stock value traded ratio. Data were carefully sourced from World Bank development indicators of both countries. The ARDL co-integration divulged equilibrium long run relationship between stock market development and economic growth in Nigeria but not for South Africa. In both short and long run, there was a positive but insignificant relationship between stock market development and economic growth in Nigeria and South Africa. The granger causality analysis deduced that economic growth of South Africa is significantly affected by market capitalization but not so in Nigeria. The variation in economic growth owing to fluctuation in stock market development indices were observed to be insignificant for both Nigeria and South Africa. The study concluded that stock market development is relevant to economic growth as postulated in theoretical literature. Information disclosure in the stock markets of both countries need to be improve upon in an attempt to reducing information asymmetries. The availability of vital information of listed firms to insiders in the market hinders foreign investments. The non-availability of rating agencies and of a well-defined structure of regulation handicap investors from adequate assessment of firms' risk priori to investing their funds.
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Stock Markets and Economic Growth

Stock Markets and Economic Growth

This study aims at filling this gap. Based on data from the Republic of South Africa, Anne Gronski investigates the impact of the stock market development on investment, saving and economic growth.

Author: Ortrun Anne Gronski

Publisher: Peter Lang Pub Incorporated

ISBN: 363138064X

Category: Business & Economics

Page: 195

View: 430

Stock markets have grown rapidly in many developing countries during the past ten years. Nevertheless there is little evidence as to whether a stock market is crucial for economic development. This study aims at filling this gap. Based on data from the Republic of South Africa, Anne Gronski investigates the impact of the stock market development on investment, savings and economic growth. The author first elaborates the potential effects of stock market development, then provides an overview over the political and economic developments in South Africa during the observation period and finally applies different econometric techniques to analyse the issue empirically. At first sight, the stock market development seems to have had a negative impact on South Africa's development; while savings, investment and growth deteriorated, the stock market grew. However, the more detailed analyses show that inflation and political instability were the major culprits for the down-turn. The stock market prevented further decline in savings by providing inflation-adjusted returns. With regard to investment, the analyses show that as opposed to public investments, private investments were less affected by the unstable climate. Moreover, the analyses show that external equity finance gained importance during the considered period and that private investments reacted positively to the stock market development. The causality tests also confirm the positive effects of stock market development on economic growth.
Categories: Business & Economics

The Role of Cross Listings in Establishing a Southern African Development Community Regional Stock Exchange

The Role of Cross Listings in Establishing a Southern African Development Community Regional Stock Exchange

Master's Thesis from the year 2013 in the subject Economics - Case Scenarios, course: LLM in International Trade, Investment and Business Law in Africa, language: English, abstract: It has been established that African stock markets are ...

Author: Moses Wisdom Chisadza

Publisher:

ISBN: 3656576467

Category:

Page: 128

View: 677

Master's Thesis from the year 2013 in the subject Economics - Case Scenarios, course: LLM in International Trade, Investment and Business Law in Africa, language: English, abstract: It has been established that African stock markets are confronted with a multitude of problems which include, inadequate liquidity, low capitalisation, few market participants, a small number of listed companies and low trading volumes. As a result, their broader economic impact has so far been limited. The Southern Africa Development Community (SADC) stock markets with the exception of South Africa are small, both in terms of the number of listed companies and market capitalisation, and they display considerable illiquidity. In general, the SADC region has shallow and underdeveloped financial markets. Their development has been hampered by a number of factors which include; political and economic uncertainty, fiscal dominance, weak judicial institutions, limited investment opportunities in the private sector, technological constraints, and the shortage of skilled personnel with expertise in banking and finance. It is contended that all these problems could be eased through regional financial integration. The integration of African stock markets and the introduction of regional stock exchanges will promote cross-border listings and thus stimulate increased liquidity across markets. Thus, it is suggested that the integration of SADC's stock markets and the creation of a regional stock exchange is one of the panaceas to overcome Africa's stock market problems. A regional stock exchange has the potential for tremendous benefits for both local and foreign investors, as well as for business enterprises in the region
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The Determinants of Stock Market Development in Emerging Economies

The Determinants of Stock Market Development in Emerging Economies

This paper examines the institutional and macroeconomic determinants of stock market development using a panel data of 42 emerging economies for the period 1990 to 2004.

Author: Charles Amo Yartey

Publisher: International Monetary Fund

ISBN: UCSD:31822034559500

Category: Business & Economics

Page: 38

View: 692

This paper examines the institutional and macroeconomic determinants of stock market development using a panel data of 42 emerging economies for the period 1990 to 2004. The paper finds that macroeconomic factors such as income level, gross domestic investment, banking sector development, private capital flows, and stock market liquidity are important determinants of stock market development in emerging market countries. The results also show that political risk, law and order, and bureaucratic quality are important determinants of stock market development because they enhance the viability of external finance. This result suggests that the resolution of political risk can be an important factor in the development of emerging stock markets. The analysis also shows the factors identified above as determining stock market development in emerging economies can also explain the development of the stock market in South Africa.
Categories: Business & Economics

African Capital Markets in a Global Context

African Capital Markets in a Global Context

T.. and Martin, M. (1990), "Financial Policies in the Adaptive Economy", ODI Working Paper, No. 35. Levine. R.. and Zervos. S. (1996), "Stock Market Development and Long-Run Growth", Policy Research Working Paper, No.

Author: African Capital Markets Forum. International Conference

Publisher: African Capital Mark

ISBN: STANFORD:36105112271114

Category: Business & Economics

Page: 242

View: 402

Categories: Business & Economics

Global Stock Market Development

Global Stock Market Development

Adjasi C. K. D., B.N. Biekpe, Stock Market Development and Economic Growth: The Case of Selected African Countries, African Development Review 2005, 15, pp. 144–161. Agarwal S., Stock Market Development and Economic Growth: Preliminary ...

Author: Marcin Kalinowski

Publisher: Routledge

ISBN: 9781000457322

Category: Business & Economics

Page: 144

View: 286

In the current era of globalised financial markets, the stock market cannot be assessed solely by comparing quantitative features such as the number of listed companies or capitalisation on the stock exchange. This is of secondary importance from an investor's point of view. What is important, however, is how a given stock market behaves towards the environment – whether it is ‘hyperactive’ or ‘excessively lethargic’ in response to information. This book provides an innovative tool for assessing global stock markets. It describes the complex concept of ‘stock market development’ in light of classical and behavioural finance theories and considers both quantitative (the number of listed companies, turnover, etc.) and behavioural aspects (price volatility, the behaviour of fundamental indicators of listed companies). Based on an innovative method for assessing development, the author analyses 130 stock markets, indicating those that are more developed in terms of quantity and behaviour. Ultimately, this enables the assessment of which markets are more or less developed and why. This knowledge, used properly, offers an advantage over other financial market participants, and allows for the comprehensive assessment of individual stock markets, which can support the process of making good investment decisions. The book is an invaluable resource for research fellows and students in economics, particularly the field of finance. It is also addressed to business and stock market practitioners, such as financial market analysts, brokers and investment advisers.
Categories: Business & Economics

The Stock Market and the Financing of Corporate Growth in Africa

The Stock Market and the Financing of Corporate Growth in Africa

This paper examines the corporate financing pattern in Ghana.

Author: Charles Amo Yartey

Publisher: International Monetary Fund

ISBN: UCSD:31822034755561

Category: Business & Economics

Page: 48

View: 153

This paper examines the corporate financing pattern in Ghana. In particular, it investigates whether Singh's theoretically anomalous findings that developing country firms make considerably more use of external finance and new equity issues than developed country firms to finance asset growth hold in the case of Ghana. Replicating Singh's methodology, our results show that compared with corporations in advanced countries, the average listed Ghanaian firm finances its growth of total assets mainly from short-term debt. The stock market, however, is the most important source of long-term finance for listed Ghanaian firms. Overall, the evidence in this paper suggests that the stock market is a surprisingly important source of finance for funding corporate growth and that stock market development in Ghana has been important.
Categories: Business & Economics

The Development of African Capital Markets

The Development of African Capital Markets

Howells, P., and Bain, K., Financial Markets and Institutions (Third edition Pearson Education Ltd, London, 2000). Lallchand, J. Capital Markets Development in Sub-Saharan Africa: A Case Study of Mauritius (PhD Thesis, University of ...

Author: Boniface Chimpango

Publisher: Routledge

ISBN: 9781315408965

Category: Business & Economics

Page: 244

View: 308

Most capital markets that have been established in developing economies like Africa have struggled to make progress over two decades down the line. Development of African Capital Markets explores why these markets have remained underdeveloped and discusses a possible development theory that can be used in designing and implementing legal and institutional reforms to reinvigorate capital markets in African and other developing countries. Boniface Chimpango analyses the weaknesses of capital markets in developing countries, and argues that legal and institutional framework for capital markets in developing countries should be tailored to the unique informal rules prevalent in each country rather than being transplanted from developed countries. This book will be of interest to scholars, students and policy makers in the fields of economic development, African Studies, law, development and regulatory policy.
Categories: Business & Economics

The Derivatives Market in South Africa

The Derivatives Market in South Africa

This paper examines the role of the derivatives market in South Africa and provides policy options for promoting the development of derivatives markets in sub-Saharan Africa.

Author: Olatundun Janet Adelegan

Publisher: International Monetary Fund

ISBN: 9781451873436

Category: Business & Economics

Page: 21

View: 458

This paper examines the role of the derivatives market in South Africa and provides policy options for promoting the development of derivatives markets in sub-Saharan Africa. South Africa's derivatives market has grown rapidly in recent years, supporting capital inflows and helping market participants to price, unbundle and transfer risk. There are tight regulations on asset allocations by insurance and pension funds to prevent excessive risk taking. The development of derivatives markets in sub-Saharan African countries could enable market participants to self-insure against volatile capital flows. Theiroverdependence on bank credit as a source of funding could be reduced and their management of seasonal risk could be improved through the introduction of commodity futures. However, these markets must be appropriately regulated and supervised. Since such markets would likely be small, consideration should be given to the establishment of a regional derivatives market.
Categories: Business & Economics

Economic Integration and Development in Africa

Economic Integration and Development in Africa

Looking closely at these processes, this book combines theory with application, enumerating the imperatives and initiatives governments will be forced to confront and provides insights for policy makers, inter-governmental organizations and ...

Author: Henry Kyambalesa

Publisher: Ashgate Publishing, Ltd.

ISBN: 0754646033

Category: Business & Economics

Page: 226

View: 915

The debates over what African economic integration and development actually entails continue across international economic organizations, national governments and NGOs. Looking closely at these processes, this book combines theory with application, enumerating the imperatives and initiatives governments will be forced to confront and provides insights for policy makers, inter-governmental organizations and educators and students in African development.
Categories: Business & Economics