Abstract:
The study focused on the integration of stock exchanges within West Africa
using a Non-linear Auto Regressive Distributed Lag (NARDL). Market
capitalizations as a percentage of GDP of the various markets within the region
were obtained from the World Development Indicator (2014) and used to
determine whether the markets move in the same direction both in the long and
short runs. The empirical results indicated that market capitalization for the
various countries was I(1) and I(0). The short run estimations showed some
form of relationship between the stock exchanges but the relationships were not
clear as to the nature of the direction. In the long run there exist a relationship
only between the Ghana stock exchange and the Bourse Regionale des Valeurs
Mobilieres stock exchange. No long run relationship exists between the Ghana
stock exchange and the Nigeria stock exchange. The study further
recommended that investors should embark on cross listings and portfolio
diversification since there is the presence of potential gains due to the absence
of information asymmetry and low transaction cost within the Ghana Stock
Exchange, the Nigeria Stock Exchange and the Bourse Regionale des Valeurs
Mobilieres Stock Exchange. The major stock exchange bodies should also
embark on fostering the establishment of stock exchanges as well as their
integration within ECOWAS.
