Abstract:

In the search for the key factors that account for the low development of Africa’s stock markets, this study beams its lights on Africa's macroeconomic issues. The study utilizes a sample of eight African countries, namely, Egypt, Nigeria, South Africa, Morocco, Tunisia, Ghana, Kenya, and Mauritius; and panel data from 1994 to 2018 based on the pooled mean group estimator; the findings show that corruption and democratic accountability were found to be two vital institutional factors shaping stock market development in Africa in the long run, with the former have a negative effect and the later having a positive impact on stock market development in Africa. The study further finds that in the short run, only bureaucracy drives stock market development in Africa. In summary, corruption, accountability, and bureaucracy were significant institutional determinants in Africa's stock market development. Thus, the study recommends that efforts to develop African stock markets must address corruption and unaccountability in governance, critical institutional determinants of stock market development in Africa.