Capital asset pricing model in African markets: a systematic review and bibliometric network analysis

Emmanuel Joel Aikins Abakah, Saint Kuttu and Alfred Yawson

Chapter 11 in The Elgar Companion to Financial Economics, 2025, pp 211-225 from Edward Elgar Publishing

Abstract: This study investigates the development and application of the Capital Asset Pricing Model (CAPM) in African financial markets through bibliometric network mapping and empirical analysis. CAPM, a foundational model in finance, has been widely used for estimating expected returns based on an asset's exposure to market risk. While it performs effectively in developed markets, its assumptions often limit its applicability in emerging and fragmented markets, such as those in Africa. This study utilizes bibliometric tools, including co-authorship, thematic, and journal networks, to identify key research trends, influential contributors, and knowledge gaps within CAPM research focused on African markets. The findings reveal that CAPM research is concentrated in South Africa and Nigeria, with limited contributions from other regions. Additionally, the analysis highlights challenges such as liquidity constraints, currency volatility, and political risks, which complicate the model's predictive accuracy. The study emphasizes the need for regional adaptations of CAPM to reflect the unique economic conditions in African markets. The results contribute to the existing literature by identifying underexplored areas, encouraging cross-regional collaboration, and offering recommendations for future research. This study lays the foundation for further exploration of CAPM's applicability in Africa and provides practical insights for investors and policymakers operating in the region.

Keywords: Capital Asset Pricing Model; Financial markets; African markets (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035341399
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