Impact Of Foreign Inflows On Stock Market Performance In Selected African Countries (1998-2022) Panel Analyses Of Selected African Countries

Abstract

Foreign inflows have a significant and positive impact on stock market performance as well as the national economy. The study examined the impact of foreign inflows on the performance of the stock market in selected African countries. The research employed yearly time series data covering a period of 25 years (1998-2022) from seventeen African countries.  The Panel-ARDL regression techniques, which were unbundled into Mean Group (MG) and Pooled Mean Group (PMG) estimators were used in the empirical analysis. It was found that only foreign remittance and debt had significant and positive impact on market capitalization, whereas FDI and FPI had a significant but negative impact in the countries under investigation. In contrast, all four of these factors had a significant and positive impact on market liquidity. Additionally, the study found that market capitalization and the investigated international financial flow variables had a long-term association in five of the investigated countries and that market liquidity and the investigated international financial flow variables had a long-term cointegrating relationship across all the investigated nations. As a result of the study’s findings, laws and policies that will facilitate the inflow of foreign capital into Africa should be implemented. These measures will not only have a favorable and substantial effect on market capitalization and liquidity but will also improve stock market performance in the continent.