Local Currency Bond Market Development in Sub-Saharan Africa: A Stock-Taking Exercise and Analysis of Key Drivers

Dennis Essers, Hans Blommestein (), Danny Cassimon and Perla Ibarlucea Flores

Emerging Markets Finance and Trade, 2016, vol. 52, issue 5, 1167-1194

Abstract: This article studies the current state and drivers of government local currency bond market (LCBM) development in Sub-Saharan Africa. We first show that, increasingly, African governments issue fixed-rate local currency bonds with tenors of ten years and more on a regular basis. However, African LCBMs are also often marked by illiquidity, very few corporate securities, and narrow, bank-dominated investor bases. Second, we present an econometric analysis of the drivers of African government LCBMs based on a new high-quality, OECD-compiled panel dataset. LCBM capitalization is found to be correlated negatively with governments’ fiscal balance and inflation, and positively with common law legal origins, institutional quality and democracy.

Date: 2016
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Working Paper: Local currency bond market development in Sub-Saharan Africa: A stock-taking exercise and analysis of key drivers (2015)
Working Paper: Local currency bond market development in Sub-Saharan Africa: a stock-taking exercise and analysis of key drivers (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:52:y:2016:i:5:p:1167-1194

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DOI: 10.1080/1540496X.2015.1073987

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