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Financial market development, global financial crisis and economic growth: evidence from developing nations

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Abstract

Emerging and frontier markets in Africa have witnessed various economic and financial reforms aimed at integrating the domestic markets into the global financial market to attract investment. Whether these reforms promote high economic growth remains inconclusive. The paper applies the pooled mean group estimation technique to empirically re-investigate the link between financial market development, global financial crisis, and economic growth in selected African economies. The results strongly support our hypotheses that stock market and banking sector development promotes economic growth in the selected countries. Moreover, financial crisis reduce the positive effects of both the stock market and banking sector developments on economic growth. The study suggests that both the banking sector and stock market are important to deliver the long-run economic growth that the African region desired. Moreover, effort should be made to enact policy measures that would ensure development of the stock market which has received inadequate attention.

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Notes

  1. These countries are Botswana, Egypt, Ghana, Kenya, Mauritius, Morocco, Nigeria, South Africa, and Tunisia. Three of these countries are in the emerging market category.

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Authors and Affiliations

  1. Department of Finance and Banking, University of Malaya, 50603, Kuala Lumpur, Malaysia

    Rubi Ahmad & Oyebola Fatima Etudaiye-Muhtar

  2. Department of Accounting and Finance, University of Ilorin, Ilorin, Nigeria

    Oyebola Fatima Etudaiye-Muhtar

  3. Faculty of Economics and Management, Universiti Putra Malaysia, 43400, Serdang, Malaysia

    Bolaji Tunde Matemilola & Amin Noordin Bany-Ariffin

Authors
  1. Rubi Ahmad
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  2. Oyebola Fatima Etudaiye-Muhtar
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  3. Bolaji Tunde Matemilola
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  4. Amin Noordin Bany-Ariffin
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Correspondence to Bolaji Tunde Matemilola.

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Ahmad, R., Etudaiye-Muhtar, O.F., Matemilola, B.T. et al. Financial market development, global financial crisis and economic growth: evidence from developing nations. Port Econ J 15, 199–214 (2016). https://doi.org/10.1007/s10258-016-0123-8

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  • DOI: https://doi.org/10.1007/s10258-016-0123-8

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