Does colonisation explain the low level of growth in African financial markets?

This study examines the effect of colonisation on the growth of financial markets in Africa using a sample of 30 countries for settler mortality and 35 countries for settler sedentarisation over the 1996–2017 period. Using a robust ordinary least squares regression with fixed effects, we find that settler mortality exerts a negative impact on the evolution of financial markets in former African colonies, while the opposite effect is obtained for the settler sedentarisation rate. These results remain robust to the several tests performed. Our study provides new evidence and perspectives to the long-standing debate regarding the relationship between history and finance. As a key recommendation, we propose that policymakers should draw more inspiration from the past to make better policy decisions in terms of economic, institutional, sociocultural, and legal governance to enhance the development of their financial markets.