Stock Market Development and Economic Development in Emerging Economies

This study investigated the effect of stock market development on economic development in developing economies which include Nigeria, South Africa, Angola and Kenya using time panel data between the periods 1986 to 2018. The study employed panel co-integration test, panel regression and granger causality test. We measure stock market development using all share index, market capitalization, foreign portfolio investment and total volume traded while human development index is used as a proxy for economic development. Findings reveal that stock market activities in most African countries have not significantly impacted their economic development except for few African countries which had adequate market regulations. We further find evidence to assert that activities in South African stock market significantly promote economic development in their nation when compared to other countries under investigation. Although the Nigerian stock market activities are also significant in contributing to the economic development process, but in a negative manner while Angola performs less to Nigeria and finally, Kenya stock market activities do not significantly promote economic development in their nation. As such, we recommended that adequate regulation should be implemented introduced as this will help in ascertaining a stable stock market and thereby encouraging the foreign participant to operate in the market.