What Determines Bond Market Development in Sub-Saharan Africa?

By Olatundun Janet Adelegan, Bozena Radzewicz-Bak

September 1, 2009

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Olatundun Janet Adelegan, and Bozena Radzewicz-Bak. What Determines Bond Market Development in Sub-Saharan Africa?, (USA: International Monetary Fund, 2009) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This study empirically analyzes the determinants of bond market development in a cross section of 23 sub-Saharan African (SSA) countries between 1990 and 2008. It considers the stage of development and the size of the bond market, as well as the historical, structural, institutional and macroeconomic factors driving bond market development in SSA. The study finds that the savings constraint is a key impediment to domestic bond markets development as well as financial market deepening, as it results in a low level of financial intermediation by the banks. Overall, the results show that a confluence of factors matters for the development of domestic bond markets in SSA; these include structure of the economy, investment profile, law and order, size of the banking sector, the level of economic development, and various macroeconomic factors. Policy implications include increased efforts to strengthen the investment environment and the need for a regional approach to bond market development.

Subject: Commercial banks, Domestic debt, Financial institutions, Financial markets, National accounts, Private debt, Public debt, Securities markets

Keywords: Africa, Bond market, Bond market development, Bond market development in SSA, Bond market intermediation, Bond market market capitalization, Bond markets in SSA, Commercial banks, Corporate bonds, Debt, Determinants of bond market development, Development in SSA, Development in SSA country, Domestic debt, Functioning bond market, GDP, Government bonds, Liquid bond market, Macroeconomic factors, Private debt, Public debt debt market, Public debt market development, Securities markets, Sub-Saharan Africa, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/213
Stock No:

WPIEA2009213
ISBN:

9781451873603
ISSN:

1018-5941

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