VI. D. Shareholder Protection: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA?

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References: Stock Market Development in Sub-Saharan Africa - By International Monetary Fund

Another key determinant of stock market development is the level of shareholder protection
in publicly traded companies, as stipulated in securities or company laws (Shleifer and
Vishny, 1997). Stock market development is more likely in countries with strong shareholder
protection because investors do not fear expropriation as much. In addition, ownership in
such markets can be relatively dispersed, which provides liquidity to the market. La Porta et
al (1999) provide evidence for the importance of minority rights protection by using indicators of the quality of shareholder protection as written in laws. They demonstrate that
the quality of shareholder protection is correlated with the capitalization and liquidity of
stock markets in 49 countries around the world. Laporta et al (1997) find that countries with
lower quality of legal rules and law enforcement have smaller and narrower capital markets
and that the listed firms on their stock markets are characterized by more concentrated
ownership. Demirguc-Kunt and Maksimovic (1998) show that firms in countries with high
ratings for the effectiveness of their legal systems are able to grow faster by relying more on
external finance.

IMF Working Paper
African Department
Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges
Prepared by Charles Amo Yartey and Charles Komla Adjasi
August 2007

VI. A. Macroeconomic Stability: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA?

VI. B. Banking Sector Development: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA?

Introduction: Stock Market Development in Sub-Saharan Africa

VII G. Strengthen Education: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA

VI. C. Institutional Quality: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA?

III. STOCK MARKET DEVELOPMENT IN SUB SAHARAN AFRICA:TRENDS AND CHARACTERISTICS

VIII. SUMMARY AND CONCLUSION: Stock Market Development in Sub-Saharan Africa

V. D. The Future of China-Africa Economic Relations: FACTORS INFLUENCING THE GROWING TIES

VII. A. Automation: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA

Introduction: Human Capital and Economic Development

Why Every Business Big or Small Should Take Advantage of Shareholder Agreements.

IV. B. Private Investors: THE ROLE OF THE PRIVATE SECTOR

Wall Street, “Africa is Investing’s Final Frontier”

VII F. Attract Capital Flows and Encourage Foreign Participation: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA

4.4 References: Economic Report on Africa 2007

Berkshire Hathaway B 50-1 Split Contingent

4.0 Diversification trends in Africa: Economic Report on Africa 2007

VII D. Promote Institutional Investors: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA

New Partnership for Africa’s Development

V. STOCK MARKETS AND ECONOMIC GROWTH: THE MACRO CHANNEL

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References: Stock Market Development in Sub-Saharan Africa - By International Monetary Fund

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The IMF is an international organization of 185 member countries. It was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment. Since the IMF was established its purposes have remained unchanged but its operations—which involve surveillance, financial assistance, and technical assistance—have developed to meet the changing needs of its member countries in an evolving world economy.
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VI. D. Shareholder Protection: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA?

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