The Effects of Public Sector Management and Institutions on Stock Market Development in Sub- Saharan Africa

Abstract

Recently, sub-Saharan Africa (SSA) stock markets have received an exceptional attention as a market of hope and future. Hence, policy-makers, investors and financial analysts have been striving to ameliorate the factors that are detrimental to stock market development in SSA. Given this, the primary focus in literature has been based on the role that institutions play in influencing stock market development in SSA. Hence, this study employed fixed and random effect estimations technique on a balanced panel data of six (6) selected SSA countries to explore the impact of public sector management and institutions on stock market development in SSA for the period 2005–2018. This study found that, on average, countries with quality public sector management and institutions have been able to improve on their stock market development compared with countries without quality public sector management and institutions. In disaggregating the impact of public sector management and institutions into West and East countries in SSA, the study further demonstrated that public sector management and institutions enhance stock market development in these countries in SSA. However, we found that the effect of public sector management and institutions is insignificant in the East Africa communities (EACs). Based on these results, the study recommends that governments in SSA should put in place stringent measures that seek to enhance public sector management and institutions within SSA countries.

Keywords:

• Public sector management and institutions
• stock market development
• sub-Saharan Africa
• fixed and random effect

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Stock market capitalization.

2. Budgetary and financial management, revenue mobilization and public administration.

3. Property rights and rule-based governance, voice and accountability, corruption control, and transparency in the public sector.

4. Stock market capitalization, turnover ratio and number of listed companies.

5. Budgetary and financial management, revenue mobilization, public administration,

property rights and rule-based governance, voice and accountability, corruption control, and transparency in the public sector.

6. Cote d’Ivoire, Ghana, Kenya, Malawi, Nigeria and Uganda.

7. Public sector management and institutions and stock market development.

8. World Bank’s Development indicators, Worldwide Governance Indicators, Environment Social and Governance Database and Global Financial Development Dataset.

9. Efficient revenue mobilization, property right and rule- based governance, budgetary and financial management, public administration, control of corruption and voice and accountability.

10. Stock market capitalization, turnover ratio and the number of listed companies.

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

Gideon Mensah

Gideon Mensah holds Master of Philosophy in Economics from the Kwame Nkrumah University of Science and Technology (KNUST), Kumasi. He is currently a graduate and research assistant at the Department of Economics, KNUST. His research interests include macroeconomics, international economics, monetary economics, environmental economics and financial economics.

Anthony Kofi Osei-Fosu

Anthony Kofi Osei-Fosu is an Associate Professor in Economics at the Department of Economics, Kwame Nkrumah University of Science and Technology (KNUST), Kumasi. He holds Bachelor of Arts degree in Social Sciences with specialization in Economics and Geography. He also holds MA in Economics and PhD in Economics from the Kwame Nkrumah University of Science and Technology (KNUST), Kumasi. He has also obtained Postgraduate Diploma in International Studies from the John Hopkins University, the School of Advanced International Studies (SAIS), Bologna Centre in Italy, and Postgraduate Diploma in Education, with specialization in Economics from the University of Cape Coast in Cape Coast. His areas of specialization are in Quantitative Economics, Monetary Economics, Public Sector Economics, and Poverty Reduction and Development. He has published number of peer review journal articles on microfinance, poverty and development in high class journals.

Grace Nkansah Asante

Grace Nkansah Asante is an associate professor at the Department of Economics of the Kwame Nkrumah University of Science and Technology (KNUST) Kumasi Ghana. She has been teaching for eleven years. Currently she is teaching introductory courses to economics, Economy of Ghana, Economic Policy Analysis and Financial Markets and Institutions. Her research interest is in economic policy issues, finance and monetary issues. Prior to her position at the KNUST, she was a research officer at the Governance Division of the African Development Bank in Abidjan. She has also been a public administrator posted at the Kumasi Metropolitan Assembly. She holds a PhD in Economics from KNUST, a master’s degree from the University of Ghana Legon. Her areas of research have been Finance and economic policy issues