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2008 AEC - How integrated are Africa’s stock markets with the rest of the world?


This paper addresses integration of African stock markets into the global financial system and the implications for investment decisions and risk sharing. First, we show that African countries are not well integrated with each other. Thus, numerous attempts at regionalism are yet to yield the necessary results. Secondly, we find few cases of long-run relationship between African markets and the rest of the world. Using impulse responses we find that while African markets are not completely isolated from the global financial system, shocks are mainly driven from within.

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