A Counterfactual Analysis of the Impact of Stock Market Absence on economic growth in selected Sub-Saharan African countries

Authors

• Etsub Tekola Jemberu, Tomas Bata University in ZlínFollow
• Adriana Knápková, Tomas Bata University in Zlín
• Bruce Dehning, Chapman UniversityFollow

Document Type

Article

Publication Date

4-10-2026

Abstract

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.

Comments

This article was originally published in Humanities and Social Sciences Communications, volume 13, in 2026. https://doi.org/10.1057/s41599-026-07120-3

Recommended Citation

Jemberu, E., Knápková, A. & Dehning, B. A counterfactual analysis of the impact of stock market absence on economic growth in selected Sub-Saharan African countries. Humanit Soc Sci Commun 13, 876 (2026). https://doi.org/10.1057/s41599-026-07120-3

Peer Reviewed

1

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The authors

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This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License