International Journal of Economics, Business and Management Studies

Volume 7, Number 1 (2020) pp 80-94 doi 10.20448/802.71.80.94 | Research Articles


The Globalization Wave and Stock Market Return in Africa

Kingsley Onyele 1 ,

Eberechi Ikwuagwu 1 

1 Department of Banking & Finance, Michael Okpara University of Agriculture, Umudike-Umuahia, Abia State Nigeria.


The study investigated the effect of globalization on stock market returns in a panel of five (5) African countries (South Africa, Nigeria, Egypt, Morocco and Namibia) over the period of 2000 and 2018. The study used Pooled Mean Group/ARDL estimation with panel unit root and cointegration tests. After establishing cointegration, globalization index, foreign direct investments and exchange rate were found to have positive and significant effects on stock market returns in both in the long run, while trade openness had a negative and significant effect on stock market returns in the long-run. The error correction mechanism showed that the speed of adjustment between globalization, FDI, exchange rate and trade openness was high, that is, the aforementioned variables rapidly adjusted to any disequilibrium in the short-run. The short-run dynamics revealed that globalization index and trade openness had positive effect on stock market returns while FDI and exchange rate exerted negative effect on stock market returns in the short-run. However, only trade openness was significant in the short-run. Finally, the was one-way causal flow running from each of globalization index, exchange rate and trade openness to stock market returns among the selected African stock markets. Hence, it was concluded that globalization is a significant determinant of stock market returns in Africa.


Stock market returns FDI Exchange rate Trade openness and Africa.


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