Economic growth in Africa: The role of corporate governance and stock market developments

Abstract

The study explored the link between corporate governance, stock market developments and economic growth by using data on selected African countries. Analysis was done within the Arellano-Bond Dynamic Panel data modelling. Results show that corporate governance and particularly the independence of corporate boards is important for firm performance and economic growth and that stock markets also play an important role in economic development. However, while market size is conclusive, our findings points to the fact that an increase in stock market activities must be focussed and carefully supported with appropriate mix of policies and programs in order to achieve the desired impact on economic growth because too many policies could erode the effect of critical indicators.