Doctoral Dissertation Research: Transplanting and Translating the Stock Market in Developing Countries

Cornell University, Ithaca NY

Investigators

Abstract

SES-0802469 Richard Swedberg Christopher Yenkey Cornell University Stock markets are unique market structures whose efficacy is predicated on complex sets of institutionalized formal rules and procedures. Developing countries in sub-Saharan Africa are rapidly establishing stock markets despite the frequent lack of institutional frameworks needed to facilitate the operation of sophisticated markets. This dissertation seeks to answer: 1) What institutional arrangements are transplanted from first-world sources to developing countries and how effectively are they translated into their new environments; 2) What difficulties do regulators face in enforcing newly adopted regulations, and what role is played by formal regulation in establishing confidence in these new markets; and 3) What factors affect investment options available in sub-Saharan stock markets? Quantitative data will be collected from a sample of seven stock markets in sub-Saharan Africa (Kenya, Malawi, Nigeria, Tanzania, Uganda, Zambia, and Zimbabwe). Quantitative data collection will focus on levels and types of firm and shareholder participation, market performance data, involvement by foreign advisors, rates of regulatory rule violations, availability of investment instruments, and qualifications of domestic regulators. Qualitative data will also be gathered through in-depth interviews with market regulators, intermediaries, and listed and unlisted firms in Kenya and Tanzania. Collecting qualitative data on topics similar to the quantitative aspects will add explanatory depth and clarity to the quantitative analysis. Broader Impacts: The research contributes to ongoing efforts to stimulate economic development in sub-Saharan Africa and will strengthen research ties with several African organizations as well as creating a comprehensive database on African capital markets. The field work is hosted by the Institute of Economic Affairs in Nairobi, Kenya and durable research relationships are being formed with many African capital market organizations, as they contribute to the creation of a new and diverse database that will be a valuable resource to scholars interested in issues of institutional change as well as economic development in emerging markets.