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Barriers to the development of small stock markets: A case study of Swaziland and Mozambique

Barriers to the development of small stock markets: A case study of Swaziland and Mozambique
Barriers to the development of small stock markets: A case study of Swaziland and Mozambique

The establishment of a successful stock market in a developing economy can be a major source of economic growth if it provides development finance by channelling domestic savings and attracting foreign investment. However, this objective is not always met, particularly in very small markets where there are barriers to efficient market operations. A case study of Swaziland and Mozambique illustrates that any potential gains to the domestic investment community are limited if there is insufficient liquidity and the political economy is such that ownership is not truly dispersed but rather remains in the hands of social elites. This paper finds that potential growth of small developing markets is further severely constrained by poverty and wealth inequality and consequently the impact on development is minimal.

Illiquidity, Political economy, Sub-saharan africa, Swaziland and mozambique
0954-1748
1018-1037
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Piesse, Jenifer
b85393d2-b4ae-49f2-87cd-8b5007c99e97
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Piesse, Jenifer
b85393d2-b4ae-49f2-87cd-8b5007c99e97

Hearn, Bruce and Piesse, Jenifer (2010) Barriers to the development of small stock markets: A case study of Swaziland and Mozambique. Journal of International Development, 22 (7), 1018-1037. (doi:10.1002/jid.1604).

Record type: Article

Abstract

The establishment of a successful stock market in a developing economy can be a major source of economic growth if it provides development finance by channelling domestic savings and attracting foreign investment. However, this objective is not always met, particularly in very small markets where there are barriers to efficient market operations. A case study of Swaziland and Mozambique illustrates that any potential gains to the domestic investment community are limited if there is insufficient liquidity and the political economy is such that ownership is not truly dispersed but rather remains in the hands of social elites. This paper finds that potential growth of small developing markets is further severely constrained by poverty and wealth inequality and consequently the impact on development is minimal.

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More information

Published date: October 2010
Keywords: Illiquidity, Political economy, Sub-saharan africa, Swaziland and mozambique

Identifiers

Local EPrints ID: 423423
URI: http://eprints.soton.ac.uk/id/eprint/423423
ISSN: 0954-1748
PURE UUID: 408b2b1e-59c2-4e41-918b-005c32012519
ORCID for Bruce Hearn: ORCID iD orcid.org/0000-0001-9767-0198

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Date deposited: 21 Sep 2018 16:30
Last modified: 23 Jul 2022 02:22

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Contributors

Author: Bruce Hearn ORCID iD
Author: Jenifer Piesse

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