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Economic Change and Restructuring

, Volume 52, Issue 4, pp 439–451 | Cite as

Effectiveness of legal institutions in stock market development in sub-Saharan Africa

  • Olufemi Adewale AlukoEmail author
  • Bolanle Aminah Azeez
Article
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Abstract

The law and finance theory posits that legal institutions are associated with stock market development. We examine the effectiveness of legal institutions in stock market development in 11 countries in sub-Saharan Africa for the period 2000–2014. Based on the two-stage least squares estimator, we find that the effectiveness of legal institutions does not promote stock market development in sub-Saharan Africa, after controlling for income, banking sector development, inflation, endowments, capital account liberalization, culture, and democracy. We provide empirical support for the law and finance theory by establishing that legal institutions explain cross-country differences in stock market development in sub-Saharan Africa.

Keywords

Legal institutions Stock market development Sub-Saharan Africa 

JEL Classification

G20 K15 O55 

Notes

Acknowledgements

We would like to express gratitude to the editor and anonymous referees for their comments and suggestions which were useful in improving the quality of our paper. We bear responsibility for all remaining errors.

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© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of FinanceUniversity of IlorinIlorinNigeria
  2. 2.Department of FinanceEkiti State UniversityAdo-EkitiNigeria

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