Stock market development and capital formation in selected African economies
Purpose – This study aims to explore the possibility that securities markets in selected African countries of Egypt, Kenya, Nigeria and South Africa play a significant role in capital accumulation using panel data analysis. This is done by exploring the relationship between gross fixed capital forma...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2023-12-01
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| Series: | Journal of Money and Business |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JMB-05-2022-0023/full/pdf |
| _version_ | 1797448211587137536 |
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| author | Olusegun Felix Ayadi Johnnie Williams |
| author_facet | Olusegun Felix Ayadi Johnnie Williams |
| author_sort | Olusegun Felix Ayadi |
| collection | DOAJ |
| description | Purpose – This study aims to explore the possibility that securities markets in selected African countries of Egypt, Kenya, Nigeria and South Africa play a significant role in capital accumulation using panel data analysis. This is done by exploring the relationship between gross fixed capital formation on the one hand and financial market development indicators on the other hand. Thus, the study aims to examine if stock market size and liquidity are determinants of capital accumulation. Design/methodology/approach – The analysis is based on annual times series from 1991 through 2017 spanning four African stock markets. The analysis utilizes the fixed-effect and random-effect econometric models. The Durbin–Wu–Hausman test is used to choose between the two models. Findings – The key results indicate that stock market capitalization is a positive determinant of gross fixed capital formation. The market value traded and turnover have no relationship with capital formation. Therefore, the role of stock African stock markets in promoting capital accumulation and, subsequently, industrial growth in Africa is seriously questioned. Originality/value – Only a handful of studies have examined the role of the African securities market in promoting capital accumulation. This study is unique in which it focuses on the leading stock markets in the four corners of Africa. The markets are from Egypt in the north, South Africa from the south, Nigeria from the west and Kenya from the east. These four markets account for a significant segment of all African markets. |
| first_indexed | 2024-03-09T14:07:11Z |
| format | Article |
| id | doaj.art-b54b46d73a804388beaa1b06c7fde109 |
| institution | Directory Open Access Journal |
| issn | 2634-2596 2634-260X |
| language | English |
| last_indexed | 2024-03-09T14:07:11Z |
| publishDate | 2023-12-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Journal of Money and Business |
| spelling | doaj.art-b54b46d73a804388beaa1b06c7fde1092023-11-30T03:56:13ZengEmerald PublishingJournal of Money and Business2634-25962634-260X2023-12-013212513610.1108/JMB-05-2022-0023Stock market development and capital formation in selected African economiesOlusegun Felix Ayadi0Johnnie Williams1Department of Accounting and Finance, Jesse H Jones School of Business, Texas Southern University, Houston, Texas, USADepartment of Business Administration, Jesse H Jones School of Business, Texas Southern University, Houston, Texas, USAPurpose – This study aims to explore the possibility that securities markets in selected African countries of Egypt, Kenya, Nigeria and South Africa play a significant role in capital accumulation using panel data analysis. This is done by exploring the relationship between gross fixed capital formation on the one hand and financial market development indicators on the other hand. Thus, the study aims to examine if stock market size and liquidity are determinants of capital accumulation. Design/methodology/approach – The analysis is based on annual times series from 1991 through 2017 spanning four African stock markets. The analysis utilizes the fixed-effect and random-effect econometric models. The Durbin–Wu–Hausman test is used to choose between the two models. Findings – The key results indicate that stock market capitalization is a positive determinant of gross fixed capital formation. The market value traded and turnover have no relationship with capital formation. Therefore, the role of stock African stock markets in promoting capital accumulation and, subsequently, industrial growth in Africa is seriously questioned. Originality/value – Only a handful of studies have examined the role of the African securities market in promoting capital accumulation. This study is unique in which it focuses on the leading stock markets in the four corners of Africa. The markets are from Egypt in the north, South Africa from the south, Nigeria from the west and Kenya from the east. These four markets account for a significant segment of all African markets.https://www.emerald.com/insight/content/doi/10.1108/JMB-05-2022-0023/full/pdfMarket liquidityAfricaMarket capitalizationCapital formationStock marketEconomic growth |
| spellingShingle | Olusegun Felix Ayadi Johnnie Williams Stock market development and capital formation in selected African economies Journal of Money and Business Market liquidity Africa Market capitalization Capital formation Stock market Economic growth |
| title | Stock market development and capital formation in selected African economies |
| title_full | Stock market development and capital formation in selected African economies |
| title_fullStr | Stock market development and capital formation in selected African economies |
| title_full_unstemmed | Stock market development and capital formation in selected African economies |
| title_short | Stock market development and capital formation in selected African economies |
| title_sort | stock market development and capital formation in selected african economies |
| topic | Market liquidity Africa Market capitalization Capital formation Stock market Economic growth |
| url | https://www.emerald.com/insight/content/doi/10.1108/JMB-05-2022-0023/full/pdf |
| work_keys_str_mv | AT olusegunfelixayadi stockmarketdevelopmentandcapitalformationinselectedafricaneconomies AT johnniewilliams stockmarketdevelopmentandcapitalformationinselectedafricaneconomies |