Associate Professor of Finance, Stockholm University
Lecturer in Finance, Markfield Institute, Gloucestershire University
Since Fama's (1970) seminal paper, market microstructure has been a major subject of interest in finance. Although studies mainly focus on the developed markets, greater attention started to shift toward emerging markets in the 1990s. During the last three decades, the number of stock markets in the world's developing economies has increased sharply. In the case of Africa, the number of stock exchanges has grown from 8 in 1989 to 26 in 2011, while total market capitalization has increased by 113 percent between 1995 and 2005 (Andrianivo and Yartey 2009). Establishing financial markets in African emerging countries has been central to promoting the financial liberalization programs of many of these governments (Yartey and Adjasi 2007). Several international institutions and organizations, such as the International Monetary Fund and the United Nations, have encouraged and supported developing stock markets in Africa.
Jefferis and Smith (2004) highlight the ability of stock markets to play key roles in pricing and allocating capital, as well as pricing risk. Lagoarde-Segot and Lucey (2008) also assert that informational efficiency is essential for the relationship between stock markets and economic growth. Despite the rapid increase in the market capitalization of African ...