Stock Value Traded and Economic Growth in Sub-Saharan Africa (British Journal of Advanced Research)

Summary

• The study examines the impact of stock value traded on economic growth across ten Sub-Saharan African economies over 1995 to 2025.p.1
• In the short run, the stock value traded coefficient is 2.074 and significant at the 1% level in the two-step system GMM estimate.p.16
• The long-run coefficient of stock value traded is 2.087, greater than the short-run estimate of 2.074.p.19
• The lagged dependent variable coefficient is 0.921, showing that past growth has a positive and significant effect on current growth.p.16
• The consumer price index coefficient in the two-step system GMM is 1.987, positive and significant at the 1% level.p.17
• Market-based financial development proxied by stock value traded has a positive and statistically significant impact on real GDP per capita growth.p.1

Key insights

1. The Westerlund tests indicate a long-run relationship between financial development and economic growth, with Ga significant at 1% and Pt at 10%.p.13
2. The Sargan and Hansen statistics of 0.59 and 1.32 indicate that the instruments are jointly exogenous.p.15
3. Gross fixed capital formation, government expenditure on education, consumer price index and trade openness are all positive and significant at the 1% level.p.19
4. Trade openness reports a short-run coefficient of 0.956 and is significant at the 1% level.p.17
5. Stock value traded is expected to exert more impact on the Sub-Saharan economy in the long run than in the short run.p.19
6. The authors recommend reducing transaction costs, modernising trading infrastructure and streamlining listing requirements to deepen regional bourses.p.20