Government Quality Determinants of Stock Market Performance in African Countries

Journal of African Business, 13(3), pp. 183-199. (2012)

40 Pages Posted: 9 Sep 2014 Last revised: 1 Apr 2015

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: December 8, 2011

Abstract

How do government policies and institutions affect stock market performance? As stock markets grow broader and deeper in African countries, the question becomes more critical. Government quality dynamics of corruption-control, government-effectiveness, political-stability or no violence, voice & accountability, regulation quality and rule of law are instrumented with income-levels, religious-dominations, press-freedom degrees and legal-origins to account for stock market performance dynamics of capitalization, value traded, turnover and number of listed companies. The results demonstrate a significant positive association between stock market performance measures and the quality of government institutions. These findings suggest countries with better developed government institutions would favor stock markets with higher market capitalization, better turnover ratios, higher value in shares traded and greater number of listed companies.

Keywords: Financial Markets; Government Policy; Political Economy

JEL Classification: G10; G18; G28; P16; P43

Suggested Citation

Asongu, Simplice, Government Quality Determinants of Stock Market Performance in African Countries (December 8, 2011). Journal of African Business, 13(3), pp. 183-199. (2012) . Available at SSRN: https://ssrn.com/abstract=2493176 or http://dx.doi.org/10.2139/ssrn.2493176

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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