The African stock market remains underdeveloped despite the increased number of stock exchanges in the region characterized by low market capitalization, volume and illiquidity. The efforts of the previous policies to promote stock market development and restore investors’ confidence in the region did not yield a positive outcome, as they are yet to meet the rising demand for capital by domestic firms. This article investigates the effects of life expectancy and financial crisis on the stock market development in Africa, using the pooled mean group (PMG) model for the sample period of 1996–2016. The findings reveal a positive and statistically significant long-run relationship between the life expectancy and stock market development. Furthermore, the financial crisis adversely affects the stock market development with an attendant decrease in investment. There is a need for policies that address infant mortality, encourage long-term investment and protect the African stock market against an adverse reaction of the financial crisis.
AcemogluD. & JohnsonS. (2007). Disease and development: The effect of life expectancy on economic growth. Journal of Political Economy, 115(6), 925–985.
2.
AghionP.HowittP. & MurtinF. (2010). The relationship between health and growth: When Lucas meets Nelson-Phelps (Working Paper Series No.15813). Stanford, CA: National Bureau of Economic Research.
3.
AldaM. (2017). The relationship between pension funds and the stock market: Does the aging population of Europe affect it?International Review of Financial Analysis, 49, 83–97. doi: 10.1016/j.irfa.2016.12.008
4.
AliR. & AfzalM. (2012). Impact of global financial crisis on stock markets: Evidence from Pakistan and India. E3 Journal of Business Management and Economics, 3(7), 275–282. doi: 10.5539/ass.v10n10p86
5.
AnagnostidisP.VarsakelisC. & EmmanouilidesC. J. (2016). Has the 2008 financial crisis affected stock market efficiency? The case of Eurozone. Physica A: Statistical Mechanics and Its Applications, 447, 116–128. doi: 10.1016/j.physa.2015.12.017
6.
BakshiG. & ChenZ. (1994). Baby boom, population aging and capital markets. The Journal of Business, 67(2), 165–202. doi: 10.1109/ICDM.2009.90
7.
BalG. R.ManglaniA. & DeoM. (2018). Asymmetric volatility spillover between stock market and foreign exchange market: Instances from Indian market from pre-, during and post-subprime crisis periods. Global Business Review, 19(6), 1567–1579.
8.
BeckT.Demirguc-kuntA. & LevineR. (2010). Financial institutions and markets across countries and over time: The updated financial development and structure database. The World Bank Research Observer, 24(1), 77–92. doi: 10.1093/wber/lhp016
BloomD. E.CanningD.MansfieldR. K. & MooreM. (2007). Demographic change, social security systems, and savings. Journal of Monetary Economics, 54(1), 92–114. doi: 10.1016/j.jmoneco.2006.12.004
11.
BoakoG. & AlagidedeP. (2018). African stock markets in the midst of the global financial crisis: Recoupling or decoupling?Research in International Business and Finance. doi: 10.1016/j.ribaf.2018.02.001
12.
BoamahN.WattsE. & LoudonG. (2017). Financial crisis, the real sector and global effects on the African stock markets. Quarterly Review of Economics and Finance, 65, 88–96. doi: 10.1016/j.qref.2016.10.002
13.
BodieZ.TreussardJ. & WillenP. (2007). The theory of life-cycle saving and investing. Federal Reserve Bank of Boston. doi: 10.2139/ssrn.1002388
14.
CervellatiM. & SundeU. (2011). Life expectancy and economic growth: The role of the demographic transition. Journal of Economic Growth, 16(2), 99–133. doi: 10.1007/s10887-011-9065-2
15.
EcevitE. (2013). The impact of life expectancy on economic growth: Panel cointegration and causality analyses for OECD countries. The International Journal of Social Science, 16(1), 1–14. Retrieved from http://www.tijoss.com/Tijoss16thPapers/Eyyup.pdf
16.
FamaE. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417.
17.
GangadharanS. R. & YoonusC. A. (2012). Global financial crisis and stock market integration: A study on the impact of global financial crisis on the level of financial integration between the US and Indian stock markets. Asia-Pacific Journal of Management Research and Innovation, 8(2), 101–110. doi: 10.1177/2319510x1200800203
18.
GeanakoplosJ.MagillM. & QuinziiM. (2004). Demography and the long-run predictability of the stock market. Brookings Papers on Economic Activity, 1, 241–307. doi: 10.1353/eca.2004.0010
19.
GrangerC. W. & NewboldP. (1974). Understanding spurious regressions in econometrics. Journal of Econometrics, 2, 111–120. doi: 10.1016/0304-4076(86)90001-1
20.
HamiM. (2016). Economic growth and liffe expectancy: The case of Iran. Studies in Business and Economics, 11(1), 80–87. doi: 10.1515/sbe-2016-0007
21.
HansenC. W. (2013). Life expectancy and human capital: Evidence from the international epidemiological transition. Journal of Health Economics, 32(6), 1142–1152. doi: 10.1016/j.jhealeco.2013.09.011
22.
ImK.PesaranM. H. & ShinY. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53–74. doi: 10.1016/S0304-4076(03)00092-7
23.
JayachandranS. & Lleras-MuneyA. (2009). Life expectancy and human capital investments: Evidence from maternal mortality declines. The Quaterly Journal of Economics, 124(1), 349–397.
24.
JinY.LuoM. & WanC. (2018). Financial constraints, macro-financing environment and post-crisis recovery of firms. International Review of Economics and Finance, 55, 54–67. doi: 10.1016/j.iref.2018.01.007
25.
KenourgiosD. & PadhiP. (2012). Emerging markets and financial crises: Regional, global or isolated shocks?Journal of Multinational Financial Management, 22(1–2), 24–38. doi: 10.1016/j.mulfin.2012.01.002
26.
KenourgiosD.NaifarN. & DimitriouD. (2016). Islamic financial markets and global crises: Contagion or decoupling?Economic Modelling, 57, 36–46. doi: 10.1016/j.econmod.2016.04.014
27.
KinugasaT. & MasonA. (2007). Why countries become wealthy: The effects of adult longevity on saving. World Development, 35(1), 1–23. doi: 10.1016/j.worlddev.2006.09.002
28.
KunzeL. (2014). Life expectancy and economic growth. Journal of Macroeconomics, 39, 54–65. doi: 10.1016/j.jmacro.2013.12.004
29.
LeeR.MasonA. & MillerT. (2000). Life cycle saving and the demographic transition: The case of Taiwan. Population and Development Review, 26(Suppl), 194–219.
30.
LeungM. & WangY. (2010). Endogenous health care, life expectancy and economic growth. Pacific Economic Review, 15(1), 11–31. doi: 10.1111/j.1468-0106.2009.00486.x
31.
LevineR. (2005). Finance and growth: Theory and evidence. In Handbook of economic growth (pp. 867–934). doi: 10.1016/S1574-0684(05)01012-9
32.
LoserC. M. (2009). Global financial turmoil and emerging market economies: Major contagion and a shocking loss of wealth?Global Journal of Emerging Market Economics, 1(2), 137–158. doi: 10.1177/097491010900100203
33.
MahumudR. A.RawalL. B.HossainG.HossainR. & IslamN. (2013). Impact of life expectancy on economic growth and health care expenditures: A case of Bangladesh. Universal Journal of Public Health, 1(4), 180–186. doi: 10.13189/ujph.2013.010405
34.
MensiW.TiwariA. & YoonS. (2017). Global financial crisis and weak-form efficiency of Islamic sectoral stock markets: An MF-DFA analysis. Physica A: Statistical Mechanics and Its Applications. 471, 135–146. doi: 10.1016/j.physa.2016.12.034
35.
ModiglianiF. & BrumbergR. (1954). Utility analysis and the consumption function: An interpretation of cross-section data. Franco Modigliani, 6(1), 388–436. doi: 10.1057/9780230582439
36.
MoralesL. & Andreosso-O’CallaghanB. (2014). The global financial crisis: World market or regional contagion effects?International Review of Economics and Finance, 29, 108–131. doi: 10.1016/j.iref.2013.05.010
37.
NantoD. (2009). The global financial crisis: Analysis and policy implications, CRS Report for Congress. Diane Publishing. Retrieved from http://www.fas.org/sgp/crs/misc/RL34742.pdf
38.
NgangueN. & ManfredK. (2015). The impact of life expectancy on economic growth in developing countries. Asian Economic and Financial Review, 5(4), 653–660.
39.
PesaranM. H.ShinY. & SmithR. P. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Satistical Association, 94(446), 621–634. doi: 10.1080/01621459.1999.10474156
40.
PhillipsP. (1986). Understanding spurious regressions in econometrics. Journal of Econometrics, 33, 311–340. doi: 10.1016/j.athoracsur.2005.11.028
41.
RajkumarA. S. & SwaroopV. (2008). Public spending and outcomes: Does governance matter?Journal of Development Economics, 86(1), 96–111. doi: 10.1016/j.jdeveco.2007.08.003
42.
RossS. A. (1976). The arbitrage theory of capital asset pricing. Journal of Economic Theory, 13(3), 341–360.
43.
SeckD. & YoffD. (2016). The performance of African stock markets before and after the global financial crisis. In Center for Research on Political Economy.
44.
ShivaA. & SethiM. (2015). Understanding dynamic relationship among gold price, exchange rate and stock markets: Evidence in Indian context. Global Business Review, 16(5 Suppl), 93S–111S. doi: 10.1177/0972150915601257
45.
SrivastavaA.BhatiaS. & GuptaP. (2015). Financial crisis and stock market integration: An analysis of select economies. Global Business Review, 16(6), 1127–1142. doi: 10.1177/0972150915604519
46.
SugimotoK.MatsukiT. & YoshidaY. (2014). The global financial crisis: An analysis of the spillover effects on African stock markets. Emerging Markets Review, 21, 201–233. doi: 10.1016/j.ememar.2014.09.004.
47.
TripathiV. & SethR. (2014). Stock market performance and macroeconomic factors: The study of Indian equity market. Global Business Review, 15(2), 291–316. doi: 10.1177/0972150914523599
48.
WangL. (2014). Who moves East Asian stock markets? The role of the 2007–2009 global financial crisis. Journal of International Financial Markets, Institutions and Money, 28(1), 182–203. doi: 10.1016/j.intfin.2013.11.003
49.
WangG.XieC.LinM. & StanleyH. E. (2017). Stock market contagion during the global financial crisis: A multiscale approach. Finance Research Letters, 22, 163–168. doi: 10.1016/j.frl.2016.12.025
50.
WDIs (2016). The World Bank world development indicators. Retrieved from http://data.worldbank.org/data-catalog/world-developmentindicators
