Global Financial Recovery and the Stability of Africa Emerging Stock Markets

Abstract

This study investigates the impact of the global financial recovery on the stability condition of Africa emerging stock markets by employing the normality statistics and trends analyses and the use of the panel quantile regression technique to achieve this objective under daily all-share-indices covering the series range of 04/06/2008-05/05/2011; spanning 3-year period of 729 data sets and betting on the hypothesis that the global financial recovery guarantees the stability condition of Africa emerging stock markets. Our findings suggest that this hypothesis should be rejected as it could be fathomed that most emerging Africa stock markets are unstable not due solely to the effect of global financial crisis but in addition to the presence of some institutional and structural rigidities inherent in the typical African economies. Therefore, it could be right to infer that the global financial recovery (which largely exhibits “U” shape behaviour from recession), and by extension, the normality of global stock, is only a necessary but not sufficient condition to satisfy the stability condition of emerging stock markets, at least, in the context of Africa economies.

Key Words: Business fluctuations; Stock Market; Financial Crisis; Regression.