What Determines Bond Market Development in Sub-Saharan Africa?

Olatundun JANET Adelegan and Bozena Radzewicz-Bak

No 2009/213, IMF Working Papers from International Monetary Fund

Abstract: This study empirically analyzes the determinants of bond market development in a cross section of 23 sub-Saharan African (SSA) countries between 1990 and 2008. It considers the stage of development and the size of the bond market, as well as the historical, structural, institutional and macroeconomic factors driving bond market development in SSA. The study finds that the savings constraint is a key impediment to domestic bond markets development as well as financial market deepening, as it results in a low level of financial intermediation by the banks. Overall, the results show that a confluence of factors matters for the development of domestic bond markets in SSA; these include structure of the economy, investment profile, law and order, size of the banking sector, the level of economic development, and various macroeconomic factors. Policy implications include increased efforts to strengthen the investment environment and the need for a regional approach to bond market development.

Keywords: WP; bond market development; bond market; GDP; debt; government bonds; corporate bonds; macroeconomic factors; sub-Saharan Africa; bond market intermediation; development in SSA; bond market market capitalization; public debt market development; development in SSA country; public debt debt market; determinants of bond market development; bond markets in SSA; bond market development in SSA; liquid bond market; functioning bond market; Securities markets; Domestic debt; Commercial banks; Private debt; Africa (search for similar items in EconPapers)
Pages: 33
Date: 2009-09-01
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Citations: View citations in EconPapers (25)

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