SECURITIES MARKET DEVELOPMENT, GOVERNMENT REGULATIONS AND ECONOMIC GROWTH AMONG THE COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA MEMBER STATES

Abstract

Abstract

Purpose: The purpose of this paper was investigates the effect of Government regulations on the relationship between securities markets development and economic growth of the Common Markets for Eastern and Southern Africa (COMESA) member states.

Design/Methodology: The study was structured as a longitudinal study using a causal research design focusing on the study period from 2005 to 2020.  The study utilized panel data on nine (9) COMESA member states and an econometric model of four indicators: stock market capitalization, the stock traded value for securities market development (SMD), ease of doing business index (score) for government regulations (GR) and real GDP growth rate for economic growth (EG), with fixed effects model as an discussion estimator.

Findings: The study findings were that government regulations positively influence the relationship between securities market development and the economic growth of COMESA member states. The findings of the study support the neoclassical growth theory and the public interest theory of regulations. The study conclude that government regulations is a strong macroeconomic factor that can be used by the member states to directly determine the level of the relationship between SMD and economic growth.

Originality/Value: The study contributes to knowledge by providing evidence on the effect of government regulations on the relationship between SMD and EG of COMESA member states in light of the fact that there is limited empirical evidence in the finance literature.

Implication to Policy: The study recommends that COMESA member states should put in place strong and investor-friendly government regulations aimed at making the securities markets more efficient and attractive to investors to promote economic growth within the trading bloc.

Key Words: Securities Market Development, Government Regulations Economic Growth, and Fixed Effects Model.