Unraveling the dynamics: macroeconomic drivers of equity market development in Sub-Saharan Africa

Fredrick Ikpesu

International Journal of Social Economics, 2024, vol. 52, issue 2, 253-264

Abstract: Purpose - The aim of this paper is to contribute to empirical research by identifying the key macroeconomic drivers of equity market development in Sub-Saharan Africa (SSA) and to ascertain if banking sector development complements equity market development in the SSA region. Design/methodology/approach - The study employed the dynamic panel data approach using the pool mean group (PMG). The sample covered is twenty-seven (27) SSA countries between the period 2000 to 2020. Findings - The result suggests that banking sector development, economic growth, migrant remittance and trade openness are the key drivers of equity market development in the SSA region. The study also revealed that banking sector development complements equity market development in the SSA region. Originality/value - The use of robust measure in measuring equity market development (i.e. ratio of portfolio equity to gross domestic product) in ascertaining the macroeconomic drivers of equity market development. Likewise, exploring whether banking sector development complements equity market development in the SSA region makes the paper more unique, especially using the ratio of bank credit to bank deposit as a measure banking sector development. Peer review - The peer review history for this article is available at:https://publons.com/publon/10.1108/IJSE-01-2024-0005

Keywords: Macroeconomic drivers; Equity market development; Banking sector development; Pool mean group; Sub-Saharan African; B22; F62; G1 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijsepp:ijse-01-2024-0005

DOI: 10.1108/IJSE-01-2024-0005

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