Does institutional quality accelerate the growth of financial markets in Africa?

Bruno Emmanuel Ongo Nkoa (), Thierry Mamadou Asngar (), Charles Christian Atangana Zambo () and Donald Ferdinand Okere Atanga ()
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Bruno Emmanuel Ongo Nkoa: University of Yaounde II
Thierry Mamadou Asngar: University of Ndjamena
Charles Christian Atangana Zambo: University of Yaounde II
Donald Ferdinand Okere Atanga: University of Dschang

SN Business & Economics, 2023, vol. 3, issue 4, 1-26

Abstract: Abstract In this paper, we investigate the effect of political and legal institutions on the growth of financial markets in 50 African countries over the period 1996–2016. Using the system generalized methods of moment strategy, we find that in Africa, financial market growth is explained by the quality of political and legal institutions. High levels of political constraints on the executive and protection of investors' rights result in improved performance of these markets. The results further reveal that political instability and corruption reduce the performance of political and legal institutions, eroding the African financial market’s performance, thereby constraining their growth. These results are consistent with several tests conducted. As a policy recommendation, governments should strengthen their political and legal institutions. This can be done through the adoption of anti-corruption measures and strong political stability.

Keywords: Financial markets; Institutional quality; Africa; GMMs (search for similar items in EconPapers)
JEL-codes: E62 F43 G21 O41 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s43546-023-00460-1

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