The Impact of Stock Market Integration on Small Developing Countries: A Namibian Perspective

47 Pages Posted: 15 Apr 2010

See all articles by Bruce Allen Hearn

Bruce Allen Hearn

University of Southampton; University of Bradford - School of Management

Date Written: April 15, 2010


The integration of financial markets is central to development policy owing to the perceived benefits arising from small illiquid markets pooling their resources and listings and being able to collectively attract foreign investment thereby boosting low domestic savings. However the evidence from Namibia suggests that the smaller market becomes a regulatory price-taker and in order to maintain the benefits from integration on all market participants faces prohibitively high costs in constantly reforming legal, regulatory and technical standards to those of the dominant market. While Namibia has an advanced position in SADC given its closely related institutional development with South Africa other neighbouring exchanges would face both considerable fixed costs from institutional reform and then ongoing reform to compete with South Africa in retaining local primary listings. This paper finds considerable evidence against the current policy drive towards regional integration in terms of costs imposed on smaller less developed exchanges which are ultimately borne by the indigenous firms seeking cost effective sustainable external finance.

Keywords: Financial Integration, Emerging Stock Markets, Namibia

Suggested Citation

Hearn, Bruce Allen, The Impact of Stock Market Integration on Small Developing Countries: A Namibian Perspective (April 15, 2010). Available at SSRN: or

Bruce Allen Hearn (Contact Author)

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

University of Bradford - School of Management ( email )

Emm Lane
Bradford, West Yorkshire Bd9 4JL
United Kingdom

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