Regional and global market integration of African financial markets

2017-12-19 09:33:26 Viewed: 328 Downloads: 81
  • Regional and global market integration of African financial markets

      Nicholas Addai Boamah

     Publisher:

    Pub: 2017-12-19 09:33:26

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  • The study examines the degree of regional and global integration of 11African
    Stock Markets (ASMs) using monthly return series from 1997 to 2015. It tests
    for the existence of structural breaks and whether any detected significant
    break in the regional and global degrees of integration caused an increase or
    decrease in segmentation. Additionally, the study examines the impact of the
    2008 Global Financial Crisis (GFC) on the regional and global integration
    of the ASMs. Evidence is provided that suggests: (i) a time-varying regional
    and global integration of the ASMs; and (ii) that global integration dominates
    regional integration for all of the ASMs. The ASMs are more globally integrated,
    relative to their degrees of regional integration. Significant structural breaks are
    detected, which for most countries are associated with an increase in the degree
    of integration and for others a decrease in the degree of integration. Most of the
    observed structural breakpoints in the degree of global integration correspond
    with the GFC; however, the structural shifts in regional integration are largely
    unrelated to the GFC. The evidence shows that geographic proximity may have
    minimal impact on market integration unless there is an associated regional
    economic integration. Regional diversification benefits may thus exceed that of
    global diversification and vice versa depending on the extent and direction of
    economic activities of the economies of the geographic region.

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  • Keywords

    Market integration, Structural breaks, Diversification gains, Emerging markets, Africa


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