Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries

Mongwa Nkam Fonkam; Akume Daniel Akume; Molem Christopher Sama

doi:doi:10.11648/j.jim.20190804.11

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Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries

Mongwa Nkam Fonkam, Akume Daniel Akume, Molem Christopher Sama

Published in Journal of Investment and Management (Volume 8, Issue 4)

Received: 14 October 2019 Accepted: 31 October 2019 Published: 6 November 2019

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Abstract

Any country that recognises the importance of private equity investments may be forced to have a developed capital market as private equity investors use capital markets for Merger and Acquisition transactions and exit routes from portfolio companies after the holding period. Therefore, this paper seeks to assess the extent to which private equity penetration influences capital market development in Cameroon, Nigeria, Ghana, Kenya and South Africa. Secondary data was collected from private equity and venture capital data bases, World Bank development indicators, regional private equity venture capital associations and on country specific stock market websites. The Two-Stage Least Squares Instrumental Variables, Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques were used due to the potential problems of endogeneity and spherical errors of serial correlation, heteroskedasticity, cross sectional dependence and multicollinearity. The results show that the signs of the variables from the Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques are consistent with those of the Two-Stage Least Squares Instrumental Variables, though the magnitudes of the coefficients are different. In terms of the variables that are significant, the same set of variables (stock market liquidity, banking sector development and GDP per capita) is significant in all the specifications while foreign direct investment and private equity penetration (variable of interest) are insignificant in all the specifications. Based on the findings, we recommend the governments of these countries to set listing requirements based on businesses sizes, continue to improve macroeconomic environments and improve on the regulations on microcredit banks.

Published in	Journal of Investment and Management (Volume 8, Issue 4)
DOI	10.11648/j.jim.20190804.11
Page(s)	67-75
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Private Equity Penetration, Capital Market Development, SSA

References

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APA Style

Mongwa Nkam Fonkam, Akume Daniel Akume, Molem Christopher Sama. (2019). Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries. Journal of Investment and Management, 8(4), 67-75. https://doi.org/10.11648/j.jim.20190804.11

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ACS Style

Mongwa Nkam Fonkam; Akume Daniel Akume; Molem Christopher Sama. Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries. J. Invest. Manag. 2019, 8(4), 67-75. doi: 10.11648/j.jim.20190804.11

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Mongwa Nkam Fonkam, Akume Daniel Akume, Molem Christopher Sama. Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries. J Invest Manag. 2019;8(4):67-75. doi: 10.11648/j.jim.20190804.11

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@article{10.11648/j.jim.20190804.11,
  author = {Mongwa Nkam Fonkam and Akume Daniel Akume and Molem Christopher Sama},
  title = {Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries},
  journal = {Journal of Investment and Management},
  volume = {8},
  number = {4},
  pages = {67-75},
  doi = {10.11648/j.jim.20190804.11},
  url = {https://doi.org/10.11648/j.jim.20190804.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20190804.11},
  abstract = {Any country that recognises the importance of private equity investments may be forced to have a developed capital market as private equity investors use capital markets for Merger and Acquisition transactions and exit routes from portfolio companies after the holding period. Therefore, this paper seeks to assess the extent to which private equity penetration influences capital market development in Cameroon, Nigeria, Ghana, Kenya and South Africa. Secondary data was collected from private equity and venture capital data bases, World Bank development indicators, regional private equity venture capital associations and on country specific stock market websites. The Two-Stage Least Squares Instrumental Variables, Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques were used due to the potential problems of endogeneity and spherical errors of serial correlation, heteroskedasticity, cross sectional dependence and multicollinearity. The results show that the signs of the variables from the Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques are consistent with those of the Two-Stage Least Squares Instrumental Variables, though the magnitudes of the coefficients are different. In terms of the variables that are significant, the same set of variables (stock market liquidity, banking sector development and GDP per capita) is significant in all the specifications while foreign direct investment and private equity penetration (variable of interest) are insignificant in all the specifications. Based on the findings, we recommend the governments of these countries to set listing requirements based on businesses sizes, continue to improve macroeconomic environments and improve on the regulations on microcredit banks.},
 year = {2019}
}

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TY  - JOUR
T1  - Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries
AU  - Mongwa Nkam Fonkam
AU  - Akume Daniel Akume
AU  - Molem Christopher Sama
Y1  - 2019/11/06
PY  - 2019
N1  - https://doi.org/10.11648/j.jim.20190804.11
DO  - 10.11648/j.jim.20190804.11
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 67
EP  - 75
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20190804.11
AB  - Any country that recognises the importance of private equity investments may be forced to have a developed capital market as private equity investors use capital markets for Merger and Acquisition transactions and exit routes from portfolio companies after the holding period. Therefore, this paper seeks to assess the extent to which private equity penetration influences capital market development in Cameroon, Nigeria, Ghana, Kenya and South Africa. Secondary data was collected from private equity and venture capital data bases, World Bank development indicators, regional private equity venture capital associations and on country specific stock market websites. The Two-Stage Least Squares Instrumental Variables, Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques were used due to the potential problems of endogeneity and spherical errors of serial correlation, heteroskedasticity, cross sectional dependence and multicollinearity. The results show that the signs of the variables from the Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques are consistent with those of the Two-Stage Least Squares Instrumental Variables, though the magnitudes of the coefficients are different. In terms of the variables that are significant, the same set of variables (stock market liquidity, banking sector development and GDP per capita) is significant in all the specifications while foreign direct investment and private equity penetration (variable of interest) are insignificant in all the specifications. Based on the findings, we recommend the governments of these countries to set listing requirements based on businesses sizes, continue to improve macroeconomic environments and improve on the regulations on microcredit banks.
VL  - 8
IS  - 4
ER  -

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Author Information

Mongwa Nkam Fonkam

Department of Banking and Finance, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon
Akume Daniel Akume

Department of Banking and Finance, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon
Molem Christopher Sama

Department of Banking and Finance, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon

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APA Style

Mongwa Nkam Fonkam, Akume Daniel Akume, Molem Christopher Sama. (2019). Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries. Journal of Investment and Management, 8(4), 67-75. https://doi.org/10.11648/j.jim.20190804.11

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ACS Style

Mongwa Nkam Fonkam; Akume Daniel Akume; Molem Christopher Sama. Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries. J. Invest. Manag. 2019, 8(4), 67-75. doi: 10.11648/j.jim.20190804.11

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AMA Style

Mongwa Nkam Fonkam, Akume Daniel Akume, Molem Christopher Sama. Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries. J Invest Manag. 2019;8(4):67-75. doi: 10.11648/j.jim.20190804.11

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@article{10.11648/j.jim.20190804.11,
  author = {Mongwa Nkam Fonkam and Akume Daniel Akume and Molem Christopher Sama},
  title = {Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries},
  journal = {Journal of Investment and Management},
  volume = {8},
  number = {4},
  pages = {67-75},
  doi = {10.11648/j.jim.20190804.11},
  url = {https://doi.org/10.11648/j.jim.20190804.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20190804.11},
  abstract = {Any country that recognises the importance of private equity investments may be forced to have a developed capital market as private equity investors use capital markets for Merger and Acquisition transactions and exit routes from portfolio companies after the holding period. Therefore, this paper seeks to assess the extent to which private equity penetration influences capital market development in Cameroon, Nigeria, Ghana, Kenya and South Africa. Secondary data was collected from private equity and venture capital data bases, World Bank development indicators, regional private equity venture capital associations and on country specific stock market websites. The Two-Stage Least Squares Instrumental Variables, Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques were used due to the potential problems of endogeneity and spherical errors of serial correlation, heteroskedasticity, cross sectional dependence and multicollinearity. The results show that the signs of the variables from the Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques are consistent with those of the Two-Stage Least Squares Instrumental Variables, though the magnitudes of the coefficients are different. In terms of the variables that are significant, the same set of variables (stock market liquidity, banking sector development and GDP per capita) is significant in all the specifications while foreign direct investment and private equity penetration (variable of interest) are insignificant in all the specifications. Based on the findings, we recommend the governments of these countries to set listing requirements based on businesses sizes, continue to improve macroeconomic environments and improve on the regulations on microcredit banks.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Influence of Private Equity Penetration on Capital Market Development in Sub-Sahara Countries
AU  - Mongwa Nkam Fonkam
AU  - Akume Daniel Akume
AU  - Molem Christopher Sama
Y1  - 2019/11/06
PY  - 2019
N1  - https://doi.org/10.11648/j.jim.20190804.11
DO  - 10.11648/j.jim.20190804.11
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 67
EP  - 75
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20190804.11
AB  - Any country that recognises the importance of private equity investments may be forced to have a developed capital market as private equity investors use capital markets for Merger and Acquisition transactions and exit routes from portfolio companies after the holding period. Therefore, this paper seeks to assess the extent to which private equity penetration influences capital market development in Cameroon, Nigeria, Ghana, Kenya and South Africa. Secondary data was collected from private equity and venture capital data bases, World Bank development indicators, regional private equity venture capital associations and on country specific stock market websites. The Two-Stage Least Squares Instrumental Variables, Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques were used due to the potential problems of endogeneity and spherical errors of serial correlation, heteroskedasticity, cross sectional dependence and multicollinearity. The results show that the signs of the variables from the Panel Corrected Standard Errors and Feasible Generalised Least Squares estimation techniques are consistent with those of the Two-Stage Least Squares Instrumental Variables, though the magnitudes of the coefficients are different. In terms of the variables that are significant, the same set of variables (stock market liquidity, banking sector development and GDP per capita) is significant in all the specifications while foreign direct investment and private equity penetration (variable of interest) are insignificant in all the specifications. Based on the findings, we recommend the governments of these countries to set listing requirements based on businesses sizes, continue to improve macroeconomic environments and improve on the regulations on microcredit banks.
VL  - 8
IS  - 4
ER  -

Copy | Download