CAPITAL MARKET AND ECONOMIC GROWTH IN AFRICA: A PANEL DATA ANALYSIS
Mustapha Adamu Zubairu, Auwal Abubakar Muhammad and Jamilu Mallam Sani
Volume 1 Issue 1
Abstract
The study analyzes the impact of capital market on economic growth of Nigeria, Ghana, Kenya and South Africa using time series data spanning the period 1980-2014.The methodology used is panel estimation comprise of pooled ordinary least square (OLS), fixed effect and random effect techniques. Diagnostics test were also applied. The result from the pooled OLS reveals that countries have common market structure. The result of the fixed effect and random effect models confirms the existence of static interdependencies among countries which suggest the evidence of spillover effect among the countries. It also constructed three dummies aimed to account for country specific effect, the findings reveals that there is evidence of country specific effect for the period under study. However, the result of the Hausman test confirms that the null hypothesis of the random effect model cannot be rejected and suggest that the appropriate model to be used is the random effect model. Finally, the study concludes that, the nature of capital markets and the pattern of economic activities in Africa revealed the reasons why the market is performing below expectation. Therefore, the study recommends that government and regulatory agencies should promote a sound Africa stock market integration by creating a platform that will engender best corporate practice, market information which will result in growing investment, increased confidence in the financial system among African countries. Keywords: African Countries, Capital Market, Economic Growth, Panel Data and Spillover Effect.
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