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Does Cryptocurrency Hurt African Firms?

Mina Sami () and Wael Abdallah ()
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Mina Sami: Department of Economics, American University in Cairo, New Cairo 11835, Egypt
Wael Abdallah: Department of Management, American University in Cairo, New Cairo 11835, Egypt

Risks, 2022, vol. 10, issue 3, 1-17

Abstract: This paper aimed to assess the effect of the cryptocurrency market on firms’ market value, especially on the sectoral level, in Africa. To reach the study’s main goal, the authors adopted the Panel-Corrected Standard Errors (PCSEs) and Panel Double-Clustered Standard Errors (PDCSEs). Using firm-level data, the results of this study can be summarized as follows: (a) The cryptocurrency market hurts the firm market value in Africa. (b) The firms operating across different sectors respond disproportionally to the cryptocurrency market. For instance, the sectors that offer low returns in Africa (industrial, energy, financial) negatively respond to the cryptocurrency market, while the sectors that offer high returns (real estate and information technology) are not significantly affected. (c) The cryptocurrency market has a perverse effect on less experienced and highly indebted firms. (d) The consistent policies of governments to ban cryptocurrency do not work efficiently.

Keywords: cryptocurrency; sector; Africa; market cap (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2022
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