What Determines Bond Market Development in Sub-Saharan Africa?

33 Pages Posted: 13 Oct 2009

See all articles by Olatundun Janet Adelegan

Olatundun Janet Adelegan

International Monetary Fund (IMF); Lead City University

Bozena Radzewicz-Bak

International Monetary Fund (IMF)

Date Written: September 2009

Abstract

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.

Keywords: Access to capital markets, Banking sector, Bond markets, Bonds, Capital markets, Cross country analysis, External debt, Financial institutions, Financial systems, Investment, Nonbank financial sector, Public debt, Savings, Sub-Saharan Africa

Suggested Citation

Adelegan, Olatundun Janet and Radzewicz-Bak, Bozena, What Determines Bond Market Development in Sub-Saharan Africa? (September 2009). IMF Working Paper No. 09/213, Available at SSRN: https://ssrn.com/abstract=1486531

Olatundun Janet Adelegan (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Lead City University ( email )

Lagos-Ibadan Express way, Ibadan Nigeria
Ibadan
Nigeria

Bozena Radzewicz-Bak

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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