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Electronic trading and stock market participation in Africa: Does technology induce participation?

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  • Adamolekun, Gbenga
  • Sakariyahu, Rilwan
  • Lawal, Rodiat
  • Ahmed, Ammar

Abstract

This study examines the effect of migrating to electronic trading platforms on stock market participation among African stock exchanges. Using Bayesian estimations, we demonstrate that transitioning from a physical to an electronic stock exchange decreases trading activity on the stock exchange whilst increasing listing. Our findings further reveal that the impact of migration is more pronounced for non-Sub-Saharan African countries relative to Sub-Saharan countries. In terms of policy, the results imply that African exchanges cannot optimise the efficiency of their stock markets simply by migrating to electronic trading platforms.

Suggested Citation

  • Adamolekun, Gbenga & Sakariyahu, Rilwan & Lawal, Rodiat & Ahmed, Ammar, 2023. "Electronic trading and stock market participation in Africa: Does technology induce participation?," Economics Letters, Elsevier, vol. 224(C).
    • Handle: RePEc:eee:ecolet:v:224:y:2023:i:c:s0165176523000162
    DOI: 10.1016/j.econlet.2023.110991
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    References listed on IDEAS

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    1. Narayan, Paresh Kumar & Mishra, Sagarika & Narayan, Seema, 2011. "Do market capitalization and stocks traded converge? New global evidence," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2771-2781, October.
    2. Dutta, Shantanu & Essaddam, Naceur & Kumar, Vinod & Saadi, Samir, 2017. "How does electronic trading affect efficiency of stock market and conditional volatility? Evidence from Toronto Stock Exchange," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 867-877.
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    4. Charles Komla Adjasi & Charles Amo Yartey, 2007. "Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges," IMF Working Papers 2007/209, International Monetary Fund.
    5. Désiré Kanga & Christine Oughton & Laurence Harris & Victor Murinde, 2022. "The diffusion of fintech, financial inclusion and income per capita," The European Journal of Finance, Taylor & Francis Journals, vol. 28(1), pages 108-136, January.
    6. Freund, William C. & Larrain, Maurice & Pagano, Michael S., 1997. "Market efficiency before and after the introduction of electronic trading at the Toronto stock exchange," Review of Financial Economics, Elsevier, vol. 6(1), pages 29-56.
    7. Pankaj K. Jain, 2005. "Financial Market Design and the Equity Premium: Electronic versus Floor Trading," Journal of Finance, American Finance Association, vol. 60(6), pages 2955-2985, December.
    8. Liao, Huei-Chu & Lee, Yi-Huey & Suen, Yu-Bo, 2008. "Electronic trading system and returns volatility in the oil futures market," Energy Economics, Elsevier, vol. 30(5), pages 2636-2644, September.
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    Cited by:

    1. Wang, Cheng & Bouri, Elie & Xu, Yahua & Zhang, Dingsheng, 2023. "Intraday and overnight tail risks and return predictability in the crude oil market: Evidence from oil-related regular news and extreme shocks," Energy Economics, Elsevier, vol. 127(PB).

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    More about this item

    Keywords

    Stock market participation; Electronic trading platform; Africa; Sub-Saharan Africa; Technology;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • G0 - Financial Economics - - General
    • G3 - Financial Economics - - Corporate Finance and Governance

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