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Regional Integration Of Equity Markets In Sub‐Saharan Africa

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  • JENIFER PIESSE
  • BRUCE HEARN

Abstract

Equity markets in developing and emerging economies have grown in number and importance as a result of financial market globalisation. However, their role in economic growth and development is enhanced if nascent markets are integrated with well‐established ones. Market integration, measured by the transmission of returns volatility, is identified across a sample of SSA countries, using a unique dataset. Evidence for potential integration between financial markets in Sub‐Saharan Africa (SSA) is found. Spillovers are found across markets, some unidirectional and others bi‐directional. However, continued illiquidity and incomplete institutions indicate that an integrated financial community remains premature, and considerable regulatory reform and harmonisation will be necessary for this to succeed.

Suggested Citation

  • Jenifer Piesse & Bruce Hearn, 2005. "Regional Integration Of Equity Markets In Sub‐Saharan Africa," South African Journal of Economics, Economic Society of South Africa, vol. 73(1), pages 36-52, March.
    • Handle: RePEc:bla:sajeco:v:73:y:2005:i:1:p:36-52
    DOI: 10.1111/j.1813-6982.2005.00003.x
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    Cited by:

    1. Boamah, Nicholas Addai & Loudon, Geoffrey & Watts, Edward J., 2017. "Structural breaks in the relative importance of country and industry factors in African stock returns," The Quarterly Review of Economics and Finance, Elsevier, vol. 63(C), pages 79-88.
    2. Pavitra Dhamija, 2020. "Economic Development and South Africa: 25 Years Analysis (1994 to 2019)," South African Journal of Economics, Economic Society of South Africa, vol. 88(3), pages 298-322, September.
    3. Albuquerque de Sousa, J.A. & Beck, T. & van Bergeijk, P.A.G. & van Dijk, M.A., 2016. "Nascent markets: Understanding the success and failure of new stock markets," ISS Working Papers - General Series 623, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    4. Ahmed, Abdullahi D. & Huo, Rui, 2018. "China–Africa financial markets linkages: Volatility and interdependence," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1140-1164.
    5. Donou-Adonsou, Ficawoyi, 2019. "Colonialism ties and stock markets: Evidence from Sub-Saharan Africa," Research in International Business and Finance, Elsevier, vol. 47(C), pages 327-343.
    6. Sugimoto, Kimiko & Matsuki, Takashi & Yoshida, Yushi, 2014. "The global financial crisis: An analysis of the spillover effects on African stock markets," Emerging Markets Review, Elsevier, vol. 21(C), pages 201-233.
    7. Bonga-Bonga, Lumengo & Mabe, Queen Magadi, 2020. "How financially integrated are trading blocs in Africa?," The Quarterly Review of Economics and Finance, Elsevier, vol. 75(C), pages 84-94.
    8. Bruce Hearn, 2009. "Liquidity And Valuation In East African Securities Markets," South African Journal of Economics, Economic Society of South Africa, vol. 77(4), pages 553-576, December.
    9. Hearn, Bruce & Piesse, Jenifer & Strange, Roger, 2010. "Market liquidity and stock size premia in emerging financial markets: The implications for foreign investment," International Business Review, Elsevier, vol. 19(5), pages 489-501, October.
    10. Abdul-Aziz Ibn Musah & Jianguo Du & Hira Salah Ud din Khan & Alhassan Alolo Abdul-Rasheed Akeji, 2018. "The Asymptotic Decision Scenarios of an Emerging Stock Exchange Market: Extreme Value Theory and Artificial Neural Network," Risks, MDPI, vol. 6(4), pages 1-24, November.
    11. Hearn, Bruce & Piesse, Jenifer, 2009. "Sector level cost of equity in African financial markets," Emerging Markets Review, Elsevier, vol. 10(4), pages 257-278, December.
    12. Patrick Honohan & Thorsten Beck, 2007. "Making Finance Work for Africa," World Bank Publications - Books, The World Bank Group, number 6626.
    13. Abbas, Qaisar & Khan, Sabeen & Shah, Syed Zulfiqar Ali, 2013. "Volatility transmission in regional Asian stock markets," Emerging Markets Review, Elsevier, vol. 16(C), pages 66-77.
    14. Boako, Gideon & Alagidede, Paul, 2018. "African stock markets in the midst of the global financial crisis: Recoupling or decoupling?," Research in International Business and Finance, Elsevier, vol. 46(C), pages 166-180.
    15. Nick Samouilhan, 2006. "The Relationship Between International Equity Market Behaviour and the JSE," Working Papers 042, Economic Research Southern Africa.
    16. Boamah, Nicholas Addai & Watts, Edward & Loudon, Geoffrey, 2017. "Regionally integrated asset pricing on the African stock markets: Evidence from the Fama French and Carhart models," Journal of Economics and Business, Elsevier, vol. 92(C), pages 29-44.

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