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Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges

Author/Editor: Yartey, Charles Amo | Adjasi, Charles Komla
Authorized for Distribution: August 1, 2007
Electronic Access: Free Full Text (PDF file size is 361KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper examines the economic importance of stock markets in Africa. It discusses policy options for promoting the development of the stock market in Africa. The results of the paper show that the stock markets have contributed to the financing of the growth of large corporations in certain African countries. An econometric investigation of the impact of stock markets on growth in selected African countries, however, finds inconclusive evidence even though stock market value traded seem to be positively and significantly associated with growth. African stock exchanges now face the challenge of integration and need better technical and institutional development to address the problem of low liquidity. Preconditions for successful regional approaches include the harmonization of legislations such as bankruptcy and accounting laws and a liberalized trade regime. Robust electronic trading systems and central depository systems will be important. Further domestic financial liberalization such as steps to improve the legal and accounting framework, private sector credit evaluation capabilities, and public sector regulatory oversight would also be beneficial.
 
Series: Working Paper No. 07/209
Subject(s): Stock markets | Sub-Saharan Africa | Corporate sector | Financial assets | Economic growth
Author's keyword(s): Stock markets | corporate finance | economic growth | Sub-Saharan Africa
 
English  
    Published:   August 1, 2007        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2007209   Pages:   33
    Price:   US$18.00
       
     
Please address any questions about this title to publications@imf.org.