Purpose This paper aims to provide a comprehensive review of the literature on the determinants of stock market development. Design/methodology/approach The paper divides the existing studies into the theoretical and empirical literature. Then, it analyses these studies in turn. Findings Based on the theoretical literature, the determinants of stock market development can be broadly classified into two groups: macroeconomic factors and institutional factors. The theory and the empirics predict different ways in which macroeconomic factors affect stock market development. The real income and its growth rate foster stock market development, while the banking sector, interest rate and private capital flows can foster or inhibit it. Inflation and exchange rates have adverse effects on stock market development. In terms of the institutional factors, the literature indicates that different legal origins and stock market integration can have a positive or negative impact on stock market development. In addition, factors such as legal protection of investors, corporate governance, financial liberalisation and trade openness contribute positively to the development of the stock market. Research limitations/implications From the survey, it is imperative that policies which aim at enhancing institutional quality, financial integration, real income growth, macroeconomic stability and capital inflows, among others, will certainly promote stock market development within and across countries. Although the empirical studies have incorporated a large set of variables in their models, the theoretical studies do not contain rich models of stock market development. It is understandable that a theoretical model which contains a large set of the determinants of stock market development may be difficult to solve. However, such a model seems very appealing and will provide a unification of the existing literature. Originality/value The originality of the paper lies in the fact that it is the first to undertake a survey of the determinants of stock market development in the literature. It is hoped that this paper will spur further theoretical and empirical research on the determinants of stock market development.

We examine the financial consequences of rising global investor attention or risk attitude related to the COVID-19 pandemic for African stock markets. Using daily investor attention indices, which are based on global COVD-19-related google search queries, and stock return indices for 14 African stock markets, we show that investor attention is an important determinant of stock returns. Our estimates suggest that an increase in investor attention consistently reduces stock returns in three stock markets, namely Botswana, Nigeria, and Zambia. In contrast, an increase in investor attention may enhance stock returns in Ghana and Tanzania. Our estimates imply that, in uncertain times like the current pandemic, stock markets like those of Ghana and Tanzania may offer potential diversification benefits to investors. We demonstrate that our estimates are broadly robust using a composite measure of investor attention. We built a direct and unambiguous measure of investor attention or risk attitude related to the COVID-19 pandemic. In an exponential generalised autoregressive heteroskedasticity of order one (i.e. EGARCH(1,1)) framework, we regressed stock returns on their first lags, investor attention, exchange rate returns, and commodity returns, and controlled for investor attention in the variance equation.

We set out to assess the effects of exchange rate uncertainty on real consumption in selected Asian countries. Consumption influences business cycles, which in turn shape short‐run monetary policy decisions. Hence, understanding factors driving consumption is appealing to policymakers. To date, few studies have analysed the effects of uncertainty on consumption. The available ones generally focus on the long‐run effects, in spite of the fact that the short‐run persistence and adjustments to equilibrium are equally relevant. Our study takes these limitations seriously by distinguishing the short‐ and long‐run effects of exchange rate uncertainty on consumption. Using a flexible dynamic panel data technique that allows long‐run effects to be homogeneous and the short‐run effects to be heterogeneous, we find that uncertainty impedes consumption in the long run. In the short run, however, the effects are immaterial. This evidence remains robust to the measure of uncertainty, asymmetric uncertainty, inflation and the global financial crisis of 2008. By decomposing uncertainty into its temporary and permanent components, we find that the latter have a stronger effect on consumption in the long run than the former. Although both components demand policy attention, the evidence suggests that policymakers should be more concerned with permanent uncertainty.

Purpose The purpose of this paper is to examine the macroeconomic determinants of stock market development in South Africa during the period 1975–2015. Specifically, it examines the impact of banking sector development, economic growth, inflation rate, real interest rate and trade openness on the development of the South African stock market. Design/methodology/approach The author employs autoregressive distributed lag bounds testing procedure that allows the author to empirically investigate both the short- and long-run relationships between the stock market development and its determinants in the context of South Africa. In addition, the author also conducts a sensitivity analysis by accounting for the presence of structural breaks in the underlying series to check for the robustness of the estimation. Findings This paper confirms the findings by other studies that banking sector development and economic growth promote stock market development, while inflation rate and real interest rate inhibit stock market development. In addition, this paper finds an interesting result in the fact that trade openness has a negative impact on stock market development, which is different from the findings of many other studies. Originality/value Currently, while the theoretical and empirical literature presents diverse views on the relationship between each determinant and stock market development, no study has focussed on the South African stock market. Given the significant role that the South African stock market plays in Africa as measured by its market capitalisation and market capitalisation ratio, there is a need for a better understanding of the macroeconomic factors influencing its development.

This article deals with an investigation into the determinants of economic growth in Ghana over the period from 1975 to 2014. In particular, we investigated the impact of physical capital, human capital, labour, government expenditure, inflation, foreign aid, foreign direct investment, financial development, globalization and debt servicing on economic performance within an augmented Solow growth model. It was found that, in the long run, both human capital and foreign aid have a positive influence on output, while labour, financial development and debt servicing have a negative impact on output. It was also found that, in the short run, government expenditure and foreign aid have a positive influence on economic growth, while labour, inflation and financial development have a negative impact on economic growth. These findings hold important policy implications for the country.