Can Africa finance its own development : a case study of the linkages between capital market development and economic growth in South Africa

Netha, Thamsanqa Patson Junior (2012-12)

Thesis (MDF)--Stellenbosch University, 2012.


ENGLISH ABSTRACT: The effects that capital market development has on growth, specifically whether capital market development can lead to growth, have been widely debated. Studies have been conducted on modernised and sophisticated economies that give evidence of the existence of such a relationship. However, with the current increase in African economic growth rates scholars and policy makers are beginning to question the validity of the relationship in the African context. In addition, the jury is still out on whether capital market development causes growth, or whether growth causes capital market development, and what the nature and transmission mechanism of the relationship is. This study is guided by King and Levine (1993c) as well as literature reviews from various researchers. The study conducts a quantitative analysis of the South African capital markets, more specifically the Johannesburg Stock Exchange, in order to provide insight into the relationship between capital market development and growth. The time series regression analysis is conducted over the 1996-2006 period.

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