African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4138

Article in Press

The interaction between various capital market components in the Sub-Saharan Africa: A quantitative analysis from 1992-2019.

Lifa Maposa & Mthusi Ndebele

  •  Received: 22 March 2021
  •  Accepted: 08 July 2021
The capital markets components are expected to guide long-term policies pertaining to economic growth. It is from these components that various capital markets develop. African economies are lagging behind in capital markets development when these are pivotal in providing the needed stimulus for financial intermediation and economic progress. Capital markets in the Sub-Saharan African countries are in that they are highly fragmented and thin. This study investigates the interaction between capital market components in Sub-Saharan African (SSA) specifically unpacking how the components of capital markets ‘casual’ relate to each other. Data from 1992 to 2019 was sorted out as panel data and analysed using a Panel VAR framework. Stock market development, Banking sector and Pension funds are investigated in terms of the extent to which they Granger cause each other. Findings from this study are that components of capital markets influence each other unlikely. There is a positive but weak relation between the stock market and pension fund while banking sector and stock market development, pensions fund and banking sector influenced each other negatively. Granger causality suggested short term variations in the short run and a very stable casual effect in the long run. There were negative causal relationships which seem to exist between the variables themselves. Recommendations are on improving the saving culture either through the market components. Authorities are advised put policies that sustain the development of the capital markets through the supply side of resources.

Keywords: Capital market components, Vector Autoregressive, Granger Causality, Sub-Saharan African