IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/36055.html
   My bibliography  Save this paper

African Stock Market Performance Dynamics: A Multidimensional Convergence Assessment

Author

Listed:
  • Simplice A, Asongu

Abstract

This paper dissects with great acuteness, the issues of convergence in financial performance dynamics in the African continent through the lenses of stock market capitalization, value traded, turnover and number of listed companies. The empirical evidence is premised on 11 homogenous panels based on regions(Sub-Saharan and North Africa), income-levels(low, middle, lower-middle and upper-middle), legal-origins(English common-law and French civil-law) and religious dominations(Christianity and Islam). Findings provide partial support for the existence of absolute convergence in some dynamics. Only SSA reveals conditional convergence in relation to per capita number of listed companies. The speed of convergence for the most part is between 12% and 28% per annum. As a policy implication, countries should work towards adopting common institutional and structural characteristics that favor stock market development.

Suggested Citation

  • Simplice A, Asongu, 2012. "African Stock Market Performance Dynamics: A Multidimensional Convergence Assessment," MPRA Paper 36055, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:36055
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/36055/1/MPRA_paper_36055.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/41199/1/MPRA_paper_41199.pdf
    File Function: revised version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/41199/2/Convergence_in_African_Stock_Market_Performance_Dynamics_2.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    2. Elyasiani, Elyas & Mansur, Iqbal & Pagano, Michael S., 2007. "Convergence and risk-return linkages across financial service firms," Journal of Banking & Finance, Elsevier, vol. 31(4), pages 1167-1190, April.
    3. Rodrik, Dani, 2011. "The Future of Convergence," Scholarly Articles 5131504, Harvard Kennedy School of Government.
    4. Beine, Michel & Cosma, Antonio & Vermeulen, Robert, 2010. "The dark side of global integration: Increasing tail dependence," Journal of Banking & Finance, Elsevier, vol. 34(1), pages 184-192, January.
    5. Bruno, Giuseppe & De Bonis, Riccardo & Silvestrini, Andrea, 2012. "Do financial systems converge? New evidence from financial assets in OECD countries," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 141-155.
    6. Wolassa Lawisso Kumo, 2011. "Working Paper 130 - Growth and Macroeconomic Convergence in Southern Africa," Working Paper Series 314, African Development Bank.
    7. J. David Cummins & Mary A. Weiss, 2009. "Convergence of Insurance and Financial Markets: Hybrid and Securitized Risk‐Transfer Solutions," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(3), pages 493-545, September.
    8. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    9. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    10. Calcagnini,G. & Farabullini,F. & Hester,D.D., 2000. "Financial convergence in the European Monetary Union?," Working papers 22, Wisconsin Madison - Social Systems.
    11. Suk-Joong Kim & Fari Moshirian & Eliza Wu, 2018. "Dynamic Stock Market Integration Driven by the European Monetary Union: An Empirical Analysis," World Scientific Book Chapters, in: Information Spillovers and Market Integration in International Finance Empirical Analyses, chapter 10, pages 305-368, World Scientific Publishing Co. Pte. Ltd..
    12. Nazrul Islam, 2003. "What have We Learnt from the Convergence Debate?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 309-362, July.
    13. Dani Rodrik, 2011. "The future of economic convergence," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 13-52.
    14. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
    15. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-1085, December.
    16. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    17. Chen, Gong-meng & Firth, Michael & Meng Rui, Oliver, 2002. "Stock market linkages: Evidence from Latin America," Journal of Banking & Finance, Elsevier, vol. 26(6), pages 1113-1141, June.
    18. Apergis, Nicholas & Christou, Christina & Miller, Stephen M., 2014. "Country and industry convergence of equity markets: International evidence from club convergence and clustering," The North American Journal of Economics and Finance, Elsevier, vol. 29(C), pages 36-58.
    19. 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.
    20. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    21. Rajan, Raghuram & Zingales, Luigi, 2003. "Banks and Markets: the Changing Character of European Finance," CEPR Discussion Papers 3865, C.E.P.R. Discussion Papers.
    22. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    23. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    24. Dani Rodrik, 2006. "Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 973-987, December.
    25. Bessler, David A. & Yang, Jian, 2003. "The structure of interdependence in international stock markets," Journal of International Money and Finance, Elsevier, vol. 22(2), pages 261-287, April.
    26. Eun, Cheol S. & Lee, Jinsoo, 2010. "Mean-variance convergence around the world," Journal of Banking & Finance, Elsevier, vol. 34(4), pages 856-870, April.
    27. R. Cellini & A. Scorcu, 1995. "How many Italies?," Working Papers 215, Dipartimento Scienze Economiche, Universita' di Bologna.
    28. Mauro Costantini & Claudio Lupi, 2005. "Stochastic convergence among European economies," Economics Bulletin, AccessEcon, vol. 3(38), pages 1-17.
    29. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    30. Brada, Josef C. & Kutan, Ali M. & Zhou, Su, 2005. "Real and monetary convergence between the European Union's core and recent member countries: A rolling cointegration approach," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 249-270, January.
    31. Umutlu, Mehmet & Akdeniz, Levent & Altay-Salih, Aslihan, 2010. "The degree of financial liberalization and aggregated stock-return volatility in emerging markets," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 509-521, March.
    32. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-251, April.
    33. repec:ebl:ecbull:v:3:y:2005:i:38:p:1-17 is not listed on IDEAS
    34. Miller, Stephen M. & Upadhyay, Mukti P., 2002. "Total factor productivity and the convergence hypothesis," Journal of Macroeconomics, Elsevier, vol. 24(2), pages 267-286, June.
    35. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    36. Guglielmo Maria Caporale & Burcu Erdogan & Vladimir Kuzin, 2009. "Testing for Convergence in Stock Markets: A Non-linear Factor Approach," Discussion Papers of DIW Berlin 932, DIW Berlin, German Institute for Economic Research.
    37. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    38. Suk-Joong Kim & Fari Moshirian & Eliza Wu, 2018. "Evolution of International Stock and Bond Market Integration: Influence of the European Monetary Union," World Scientific Book Chapters, in: Information Spillovers and Market Integration in International Finance Empirical Analyses, chapter 12, pages 391-428, World Scientific Publishing Co. Pte. Ltd..
    39. Levy, Haim & Sarnat, Marshall, 1970. "International Diversification of Investment Portfolios," American Economic Review, American Economic Association, vol. 60(4), pages 668-675, September.
    40. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    41. Badi Baltagi & Jörg Breitung, 2011. "Introduction to the special issue," Empirical Economics, Springer, vol. 40(1), pages 1-4, February.
    42. Fung, Michael K., 2009. "Financial development and economic growth: Convergence or divergence?," Journal of International Money and Finance, Elsevier, vol. 28(1), pages 56-67, February.
    43. George M. von Furstenberg & Bang Nam Jeon, 1989. "International Stock Price Movements: Links and Messages," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 125-180.
    44. Orlowski, Lucjan T., 2005. "Monetary convergence of the EU accession countries to the eurozone: A theoretical framework and policy implications," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 203-225, January.
    45. Mariassunta Giannetti & Luigi Guiso & Tullio Jappelli & Mario Padula & Marco Pagano, 2002. "Financial Market Integration, Corporate Financing and Economic Growth," European Economy - Economic Papers 2008 - 2015 179, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    46. Giuseppe Bruno & Riccardo De Bonis, 2009. "Do financial systems converge? New evidence from household financial assets in selected OECD countries," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Proceedings of the IFC Conference on "Measuring financial innovation and its impact", Basel, 26-27 August 2008, volume 31, pages 383-401, Bank for International Settlements.
    47. Kaul, Aditya & Mehrotra, Vikas, 2007. "The role of trades in price convergence: A study of dual-listed Canadian stocks," Journal of Empirical Finance, Elsevier, vol. 14(2), pages 196-219, March.
    48. Bliss, Christopher, 2000. "Galton's Fallacy and Economic Convergence: A Reply to Cannon and Duck," Oxford Economic Papers, Oxford University Press, vol. 52(2), pages 420-422, April.
    49. Hölzl, Werner, 2006. "Convergence of financial systems: towards an evolutionary perspective," Journal of Institutional Economics, Cambridge University Press, vol. 2(1), pages 67-90, April.
    50. Andrei Shleifer, 2009. "The Age of Milton Friedman," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 123-135, March.
    51. Bliss, Christopher, 1999. "Galton's Fallacy and Economic Convergence," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 4-14, January.
    52. Adler, Michael & Dumas, Bernard, 1983. "International Portfolio Choice and Corporation Finance: A Synthesis," Journal of Finance, American Finance Association, vol. 38(3), pages 925-984, June.
    53. Su, Yong-Chern & Huang, Han-Ching & Hsu, Ming-Wei, 2010. "Convergence to market efficiency of top gainers," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2230-2237, September.
    54. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simplice A. Asongu, 2014. "African financial development dynamics: big time convergence," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 5(2), pages 160-194, July.
    2. Asongu Simplice, 2014. "Fresh Patterns of Liberalization, Bank Return and Return Uncertainty in Africa," Working Papers of the African Governance and Development Institute. 14/004, African Governance and Development Institute..
    3. Simplice Asongu, 2013. "Harmonizing IPRs on Software Piracy: Empirics of Trajectories in Africa," Journal of Business Ethics, Springer, vol. 118(1), pages 45-60, November.
    4. 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.
    5. Simplice Asongu, 2014. "African Development: Beyond Income Convergence," South African Journal of Economics, Economic Society of South Africa, vol. 82(3), pages 334-353, September.
    6. Asongu, Simplice A. & Tchamyou, Vanessa S. & Minkoua N., Jules R. & Asongu, Ndemaze & Tchamyou, Nina P., 2018. "Fighting terrorism in Africa: Benchmarking policy harmonization," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 492(C), pages 1931-1957.
    7. Bruno, Giuseppe & De Bonis, Riccardo & Silvestrini, Andrea, 2012. "Do financial systems converge? New evidence from financial assets in OECD countries," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 141-155.
    8. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Revolution empirics: predicting the Arab Spring," Empirical Economics, Springer, vol. 51(2), pages 439-482, September.
    9. Asongu Simplice & Andrés Antonio, 2014. "Global trajectories, dynamics, and tendencies of business software piracy: benchmarking IPRs harmonization," Working Papers of the African Governance and Development Institute. 14/011, African Governance and Development Institute..
    10. Simplice Asongu & Jacinta Nwachukwu, 2018. "Fighting Terrorism: Empirics on Policy Harmonisation," German Economic Review, Verein für Socialpolitik, vol. 19(3), pages 237-259, August.
    11. Simplice A. Asongu, 2014. "Fighting African Capital Flight: Empirics on Benchmarking Policy Harmonization," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(1), pages 93-122, June.
    12. Asongu, Simplice & Andrés, Antonio R., 2015. "Trajectories in Knowledge Economy: Empirics from SSA and MENA countries," MPRA Paper 71786, University Library of Munich, Germany.
    13. Simplice A. Asongu, 2013. "Real and monetary policy convergence: EMU crisis to the CFA zone," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 5(1), pages 20-38, April.
    14. Simplice A. Asongu, 2017. "Knowledge Economy Gaps, Policy Syndromes, and Catch-Up Strategies: Fresh South Korean Lessons to Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(1), pages 211-253, March.
    15. Simplice A. Asongu, 2017. "The Comparative Economics of Knowledge Economy in Africa: Policy Benchmarks, Syndromes, and Implications," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(2), pages 596-637, June.
    16. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "A Brief Future of Time in the Monopoly of Scientific Knowledge," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 58(4), pages 638-671, December.
    17. Asongu Simplice, 2012. "Are Proposed African Monetary Unions Optimal Currency Areas? Real and Monetary Policy Convergence Analysis," Working Papers of the African Governance and Development Institute. 12/005, African Governance and Development Institute..
    18. Asongu, Simplice A. & Andrés, Antonio R., 2020. "Trajectories of knowledge economy in SSA and MENA countries," Technology in Society, Elsevier, vol. 63(C).
    19. Simplice Asongu, 2014. "Are proposed African monetary unions optimal currency areas? Real, monetary and fiscal policy convergence analysis," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 5(1), pages 9-29, April.
    20. Simplice Asongu & Jacinta C. Nwachukwu, 2016. "Mobile Phones in the Diffusion of Knowledge and Persistence in Inclusive Human Development in Sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 16/009, African Governance and Development Institute..

    More about this item

    Keywords

    Convergence; Stock markets; Panel; Africa;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:36055. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.