Effectiveness of legal institutions in stock market development in sub-Saharan Africa

Olufemi Adewale Aluko () and Bolanle Aminah Azeez
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Olufemi Adewale Aluko: University of Ilorin
Bolanle Aminah Azeez: Ekiti State University

Economic Change and Restructuring, 2019, vol. 52, issue 4, No 5, 439-451

Abstract: Abstract The law and finance theory posits that legal institutions are associated with stock market development. We examine the effectiveness of legal institutions in stock market development in 11 countries in sub-Saharan Africa for the period 2000–2014. Based on the two-stage least squares estimator, we find that the effectiveness of legal institutions does not promote stock market development in sub-Saharan Africa, after controlling for income, banking sector development, inflation, endowments, capital account liberalization, culture, and democracy. We provide empirical support for the law and finance theory by establishing that legal institutions explain cross-country differences in stock market development in sub-Saharan Africa.

Keywords: Legal institutions; Stock market development; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: G20 K15 O55 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10644-018-9233-x

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