Barriers to the development of small stock markets: A case study of Swaziland and Mozambique
Version of Record online: 22 JUL 2009
Copyright © 2009 John Wiley & Sons, Ltd.
Journal of International Development
Volume 22, Issue 7, pages 1018–1037, October 2010
How to Cite
Hearn, B. and Piesse, J. (2010), Barriers to the development of small stock markets: A case study of Swaziland and Mozambique. J. Int. Dev., 22: 1018–1037. doi: 10.1002/jid.1604
- Issue online: 9 SEP 2010
- Version of Record online: 22 JUL 2009
- Sub-Saharan Africa;
- Swaziland and Mozambique;
- political economy
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. Copyright © 2009 John Wiley & Sons, Ltd.