To read this content please select one of the options below:

Regional Integration and Risk Management of African Stock Markets

Risk Management in Emerging Markets

ISBN: 978-1-78635-452-5, eISBN: 978-1-78635-451-8

Publication date: 29 December 2016

Abstract

We examine how the degree of regional financial integration in African stock markets has evolved over the last eleven years. Despite increasing regional economic cooperation, the process of stock market integration has been slow. To facilitate growth via developed financial markets but keep financial stability risk at a minimum, further regional integration should be promoted, and mild capital controls on non-African investors may be necessary. A Diebold-Yilmaz spillover analysis is applied to ten African stock markets for the period between August 2004 and January 2015. We examine spillovers among four regions and among individual countries. Regional integration, as measured by total spillovers in Africa, is increasing but remains very low. These spillovers were temporarily heightened during the global financial crisis. Cross-regional spillovers are high between Northern and Southern Africa. Asymmetric capital controls on African and non-African investors must be considered to foster further regional integration and to mitigate financial stability risk. This is one of the few studies to address the construction of the future architecture of regionally integrated stock markets in emerging countries.

Keywords

Acknowledgements

Acknowledgments

The authors Matsuki and Sugimoto acknowledge financial support from JSPS Kakenhi Grant Number 24530237 and 25380415, respectively. The author Yoshida acknowledges financial support from JSPS Kakenhi Grant Number 26380295 and the Risk Research Center at Shiga University.

Citation

Matsuki, T., Sugimoto, K. and Yoshida, Y. (2016), "Regional Integration and Risk Management of African Stock Markets", Boubaker, S., Buchanan, B. and Nguyen, D.K. (Ed.) Risk Management in Emerging Markets, Emerald Group Publishing Limited, Leeds, pp. 423-468. https://doi.org/10.1108/978-1-78635-452-520161026

Publisher

:

Emerald Group Publishing Limited

Copyright © 2016 Emerald Group Publishing Limited