Institutional structures and financial market development in Africa

Figures & data

Table 1. Explanation, measurement and sources of variables

Variables	Explanation	Measurement	Source
Ease of access to loans	How easy is it to obtain a bank loan in your country with only a good business plan and no collateral?	Log of ease of access to loans	Global competitiveness report 2009–2015
Venture capital availability	In your country, how easy is it for entrepreneurs with innovative but risky projects to find venture capital?	Log of venture capital availability	Global competitiveness report 2009–2015
Political stability	Capturing perceptions of the likelihood that the government will be destabilised or overthrown by unconstitutional or violent means, including politically motivated violence and terrorism	Log of political stability	World Bank Governance Indicators, 2009–2015
Control of corruption	Capturing perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as “capture” of the state by elites and private interests	Log of control of corruption	World Bank Governance Indicators, 2009–2015
Voice and accountability	Capturing perceptions of the extent to which a country’s citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media	Log of voice and accountability	World Bank Governance Indicators, 2009–2015
Rule of law	Capturing perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular, the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence.	Log of rule of law	World Bank Governance Indicators, 2009–2015
Regulatory quality	Regulatory quality captures perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development.	Log of regulatory quality	World Bank Governance Indicators, 2009–2015
Government effectiveness	Capturing perceptions of the extent to which a country’s citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media.	Log of government effectiveness	World Bank Governance Indicators, 2009–2015
Real GDP per capita	Real GDP per capita in US dollars	Log of real GDP per capita	Global competitiveness report 2009–2015
Trade openness	The extent in which tariff and non-tariff barriers limit the ability of imported goods to compete in the domestic market	Log of trade openness	Global competitiveness report 2009–2015

Table 2. Summary statistics

Variable	Observation	Mean	Std. deviation	Minimum	Maximum
Financial market development
Easeofaccess	280	2.581	0.621	1.300	5.200
Venturecap	280	2.356	0.467	1.400	3.500
Governance indicators	280
Institutions	280	34.762	17.595	3.077	76.923
Contcur	280	35.658	22.070	0.950	80.480
Goveffect	280	32.791	19.557	1.920	81.250
Polstab	280	35.133	22.260	2.840	88.150
Rulelaw	280	35.468	19.730	0.940	79.620
Reguqual	280	34.832	17.528	0.480	83.650
Voice	280	34.689	18.925	2.840	76.530
Controls	280
TRADEO	280	4.079	0.485	2.600	5.000
RGDPC	280	2,763.822	3,283.532	163.000	15,203.000

Note: Easeofaccess represents ease of access to loans. Venturecap represents venture capital availability. Institutions represent the simple average of the six governance indicators. Contcur represents control of corruption. Goveffect represents government effectiveness, Polstab represents political stability, Rulelaw represents rule of law, Reguqual represents regulatory quality. Voice represents voice and accountability. TRADEO represents trade openness. RGDPC represents real gross domestic product per capita.

Table 3. Correlation matrix

	Easeofaccess	Institutions	Contcur	Goveffect	Polstab	Rulelaw	Reguqual	Voice	TRADEO	RGDPC
Panel A: Correlation matrix—ease of access to loans, governance indicators and the control variables
Ease of access	1.0000	0.5208	0.4714	0.5616	0.3353	0.5222	0.4910	0.3734	0.2795	0.2979
Institutions		1.0000	0.9070	0.9181	0.8201	0.9533	0.8638	0.8135	0.4225	0.3864
Contcur			1.0000	0.8505	0.6837	0.8838	0.7057	0.6352	0.3462	0.3272
Goveffect				1.0000	0.6428	0.8050	0.8112	0.6453	0.4114	0.4208
Polstab					1.0000	0.7152	0.5831	0.6515	0.3776	0.4278
Rulelaw						1.0000	0.8272	0.7019	0.4052	0.3699
Reguqual							1.0000	0.6828	0.4256	0.2327
Voice								1.0000	0.2673	0.2348
TRADEO									1.0000	0.1441
RGDPC										1.0000
	Venturecap	Institutions	Contcur	Goveffect	Polstab	Rulelaw	Reguqual	Voice	TRADEO	RGDPC
Panel B: Correlation matrix—venture capital availability, governance indicators and the control variables
Venturecap	1.0000	0.4716	0.4800	0.5310	0.2319	0.4884	0.5033	0.2654	0.1910	0.2228
Institutions		1.0000	0.9070	0.9181	0.8201	0.9533	0.8638	0.8135	0.4225	0.3864
Contcur			1.0000	0.8505	0.6837	0.8838	0.7057	0.6352	0.3462	0.3272
Goveffect				1.0000	0.6428	0.8050	0.8112	0.6453	0.4114	0.4208
Polstab					1.0000	0.7152	0.5831	0.6515	0.3776	0.4278
Rulelaw						1.0000	0.8272	0.7019	0.4052	0.3699
Reguqual							1.0000	0.6828	0.4256	0.2327
Voice								1.0000	0.2673	0.2348
TRADEO									1.0000	0.1441
RGDPC										1.0000

Note: Easeofaccess represents ease of access to loans. Venturecap represents venture capital availability. Institutions represent the simple average of the six governance indicators. Contcur represents control of corruption. Goveffect represents government effectiveness, Polstab represents political stability, Rulelaw represents rule of law, Reguqual represents regulatory quality. Voice represents voice and accountability. TRADEO represents trade openness. RGDPC represents real gross domestic product per capita.

Table 4. Relationship between ease of access to loans and institutional structures

	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6	Model 7
Lag of Easeofaccess	0.8212***	0.8552***	0.8172***	0.8769***	0.8254***	0.8398***	0.8614***
	(0.0723)	(0.0691)	(0.0690)	(0.0640)	(0.0740)	(0.0679)	(0.0649)
Institutions	0.0477**
	(0.0238)
Contcur		0.0167
		(0.0138)
Goveffect			0.0410**
			(0.0188)
Polstab				0.0129
				(0.0158)
Rulelaw					0.0315*
					(0.0169)
Reguqual						0.0307**
						(0.0158)
Voice							0.0349*
							(0.0204)
TRADEO	−0.0313	−0.0027	0.0438	−0.0019	0.0014	−0.0088	−0.0010
	(0.1139)	(0.1105)	(0.0549)	(0.1151)	(0.1115)	(0.1090)	(0.1098)
RGDPC	0.0006	0.0020	0.0016	0.0011	0.0012	0.0044	0.0003
	(0.0102)	(0.0102)	(0.0093)	(0.0103)	(0.0104)	(0.0104)	(0.0102)
Constant	0.0349	0.0466	0.0245	0.0462	0.0364	0.0276	0.0206
	(0.0645)	(0.0648)	(0.0563)	(0.0659)	(0.0657)	(0.0646)	(0.0657)
Diagnostics
No. of obs.	280	280	280	280	280	280	280
AR(2): Z (p value)	−0.2051(0.1384)	−0.2115(0.1203)	−0.2238(0.099)	−0.2068(0.124)	−0.1870(0.182)	−0.217(0.116)	−0.2084(0.126)
Hansen: X^2 (p value)	9.78(0.743)	21.34(0.962)	19.34(0.867)	21.56(0.543)	20.45(0.865)	19.71(0.834)	20.91(0.641)

Note: Easeofaccess represents ease of access to loans. Institutions represent the simple average of the six governance indicators. Contcur represents control of corruption. Goveffect represents government effectiveness, Polstab represents political stability, Rulelaw represents rule of law, Reguqual represents regulatory quality. Voice represents voice and accountability. TRADEO represents trade openness. RGDPC represents real gross domestic product per capita. *, **, and *** indicate the respective 10%, 5%, and 1% significance levels.

Table 5. Relationship between venture capital availability and institutional structures

	Model 8	Model 9	Model 10	Model 11	Model 12	Model 13	Model 14
Lag of	0.8386***	0.8428***	0.8371***	0.8861***	0.8466***	0.8559***	0.8782***
Venturecap	(0.0376)	(0.0380)	(0.0375)	(0.0347)	(0.0391)	(0.0379)	(0.0354)
Institutions	0.0387***
	(0.0119)
Contcur		0.0220***
		(0.0072)
Goveffect			0.0328**
			(0.0010)
Polstab				0.0137*
				(0.0082)
Rulelaw					0.0214**
					(0.0085)
Reguqual						0.0201**
						(0.0086)
Voice							0.0199*
							(0.0105)
TRADEO	−0.1241**	−0.1079*	−0.1202**	−0.1062	−0.0932	−0.0972*	−0.0879
	(0.0597)	(0.0052)	(0.0597)	(0.0623)	(0.0580)	(0.0086)	(0.0586)
RGDPC	0.0002	0.0019	−0.0001	0.0009	0.0012	0.00036	0.0012
	(0.0052)	(0.0052)	(0.0053)	(0.0055)	(0.0053)	(0.0054)	(0.0054)
Constant	0.0815**	0.0907***	0.0943***	0.0888**	0.0830**	0.0760**	0.0697*
	(0.0338)	(0.0345)	(0.0347)	(0.0357)	(0.0346)	(0.0346)	(0.0351)
Diagnostics
No. of obs.	280	280	280	280	280	280	280
AR(2): Z (p value)	−0.3698(0.539)	−0.3585(0.1601)	−0.3638(0.161)	−0.3479(0.439)	−0.356(0.346)	−0.356(0.346)	−0.3524(0.677)
Hansen: X^2 (p value)	16.43(0.249)	23.71(0.745)	27.54(0.497)	26.81(0.983)	27.09(0.473)	22.72(0.598)	25.91(0.829)

Note: Venturecap represents venture capital availability. Institutions represent the simple average of the six governance indicators. Contcur represents control of corruption. Goveffect represents government effectiveness, Polstab represents political stability, Rulelaw represents rule of law, Reguqual represents regulatory quality. Voice represents voice and accountability. TRADEO represents trade openness. RGDPC represents real gross domestic product per capita. *, **, and *** indicate the respective 10%, 5%, and 1% significance levels.