Unraveling the dynamics: macroeconomic drivers of equity market development in Sub-Saharan Africa

Abstract

PurposeThe aim of this paper is to contribute to empirical research by identifying the key macroeconomic drivers of equity market development in Sub-Saharan Africa (SSA) and to ascertain if banking sector development complements equity market development in the SSA region.Design/methodology/approachThe study employed the dynamic panel data approach using the pool mean group (PMG). The sample covered is twenty-seven (27) SSA countries between the period 2000 to 2020.FindingsThe result suggests that banking sector development, economic growth, migrant remittance and trade openness are the key drivers of equity market development in the SSA region. The study also revealed that banking sector development complements equity market development in the SSA region.Originality/valueThe use of robust measure in measuring equity market development (i.e. ratio of portfolio equity to gross domestic product) in ascertaining the macroeconomic drivers of equity market development. Likewise, exploring whether banking sector development complements equity market development in the SSA region makes the paper more unique, especially using the ratio of bank credit to bank deposit as a measure banking sector development.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2024-0005