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What Can Ethiopia Learn from African Countries Stock Markets?

Abstract: 
This paper was aimed at drawing lessons what Ethiopia from African countries’ stock market. Thus the main objective of the study is focused on examining and assessing lessons regarding the experience of already developed stock markets sampled from 11 African countries from 1991-2012. Both descriptive and econometric analyses have been used in the descriptive analysis; the experiences of the sampled African stock markets have been explored regarding institutional, traditional and asset pricing characteristics. On the other hand, three econometrics models, namely panel data, dynamic panel data and Unrestricted Vector Auto regression (VAR) were used. The models attempted to show economic benefits of developing a stock market on the growth of Africa collectively and specifically on Ethiopia’s simulated growth model. The findings of the study show the ability of stock markets to enhance the effectiveness of investments, through which its effect extends to growth. This was evident from the econometrics results where stock market development had enhanced investment positively. Nevertheless their indirect impacts on growth were negatively associated due to stock market variables fluctuation (as explained by market capitalization ratio, shares traded and turnover ratio). Inefficient operation and management of the sampled African stock markets had negative contributions to growth. Finally the study advocates the establishment of stock markets in Ethiopia. However they should establish to function with operational and administrative efficiency in order to be sustainable.
Publisher: 
Ethiopian Economics Association (EEA)
ISBN/ISSN: 
978-99944-54-44-10
Primary Descriptors: 

Capital Market

Secondary Descriptor: 

Economic Development

Geographic Descriptors: 
Ethiopia
Cataloge Date: 
09/30/2015
Broad Subject heading: 
Stock Exchanges - Ethiopia
Call Number: 
330.963 PRO 2015
Serial Key Title: 
Proceedings of the Twelfth International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Volume: 
I
Publication date: 
2015-06-01 00:00:00
Conference Place: 
EEA Conference Center
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Book
Current frequency: 
Annually
Conference date: 
July 16 to 19, 2014