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<p>Despite the global expansion of financial markets as a strategy for financial reform over the past century, around one-sixth of the world’s countries lack a formal stock market. This paper provides novel evidence from nine sub-Saharan African countries on how the absence of stock markets impacts economic growth. Using the synthetic control method (SCM), we estimate the counterfactual GDP per capita these countries would have experienced had they established a stock market during 1993–1995. The findings reveal that the absence of a stock market resulted in substantial losses for most countries, including Burundi, the Democratic Republic of Congo, Comoros, Guinea, Gambia, Liberia, Madagascar, and Mauritania. In contrast, we found that the lack of a stock market had no significant effect on Ethiopia. Policymakers can use these results as evidence that stock markets are likely beneficial, absent other mechanisms such as a strong banking sector. Individual country characteristics, needs, and financial sector composition must guide policy decisions.</p>

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A counterfactual analysis of the impact of stock market absence on economic growth in selected Sub-Saharan African countries

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  • 发表日期：

    2026年4月10日

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  • Etsub Jemberu,
  • Adriana Knápková,
  • Bruce Dehning

摘要

Despite the global expansion of financial markets as a strategy for financial reform over the past century, around one-sixth of the world’s countries lack a formal stock market. This paper provides novel evidence from nine sub-Saharan African countries on how the absence of stock markets impacts economic growth. Using the synthetic control method (SCM), we estimate the counterfactual GDP per capita these countries would have experienced had they established a stock market during 1993–1995. The findings reveal that the absence of a stock market resulted in substantial losses for most countries, including Burundi, the Democratic Republic of Congo, Comoros, Guinea, Gambia, Liberia, Madagascar, and Mauritania. In contrast, we found that the lack of a stock market had no significant effect on Ethiopia. Policymakers can use these results as evidence that stock markets are likely beneficial, absent other mechanisms such as a strong banking sector. Individual country characteristics, needs, and financial sector composition must guide policy decisions.