Can Regional Cross-listings Accelerate Stock Market Development? Empirical Evidence from Sub-Saharan Africa
International Monetary Fund, Dec 1, 2008 - Business & Economics - 44 pages
This study analyzes the impact of regional cross-listing of stocks on the depth of the stock markets in sub-Saharan Africa (SSA). It analyzes data from 1990 to 2007 for a panel of 13 stock markets in SSA countries, only some of which have regional cross-listings. Using event study methodology, the paper finds significant positive effects in measures of stock market depth around regional cross-listing events. Overall, growth in the regional crosslisting of stocks facilitates stock market deepening, and the stock markets of countries with regional cross-listings perform better than those without. The study thus suggests that SSA countries can benefit from putting in place the necessary conditions for promoting regional cross-listings and thereby deepening their stock markets. These include sound legal and regulatory frameworks, macroeconomic and political stability, harmonization of listing rules, accounting laws and disclosure requirements across the region, and strong money markets.
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Review of Theoretical and Analytical Issues
The Impact of Regional CrossListings on Stock Market Development
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Actual Cross-listing AngloGold Ashanti Benin Botswana Burkina Faso Capital Market CDUM Central African Rep Congo Cote d‘lvoire countries cross-listed stocks cross-listing dummy Cross-listing of Ecobank cross-listing of stocks Dependent variable East African Breweries Ecobank Transnational estimates event study event window ﬁnance ﬁnancial ﬁxed ﬂows Gabon Ghana growth Guinea-Bissau Investment Savings Investment Jubilee Insurance Karolyi Kenya Airways listed ﬁrms lnvestec market capitalization market of primary Mauritius MCAPFR MCAPGDP measure of stock Namibia Niger Nigeria Nigerian Stock Exchange number of listed NUMFR NUMGDP Oando percent of GDP primary listing regional cross-listing regional integration retum Savings Investment Savings secondary listing sector Senegal share of GDP shared platform Shoprite South Africa speciﬁc statistically signiﬁcant stock market development Stocks traded Sub-Saharan Africa Swaziland Table Tanzania Triple Cross-listing tumover ratio U.S. dollars Uganda VALFR value of stocks various stock exchanges WAEMU World Economic Outlook YES YES Zambia Zimbabwe