Abstract:
Our paper examines the relationship between institutional structures and
the level of financial markets development in Africa. Our paper contributes to the
extant literature by using other financial market development variables—ease of
access to loans and venture capital availability—that have not before been used to
analyzed how institutional structures influence the level of financial markets development
in the context of Africa. We employ a two-step generalized method of moment
estimator with corrected standard errors to examine this.We demonstrate that a highquality
institutional environment is relevant in explaining ease of access to loans and
venture capital availability in Africa. Based on these results, our paper argues that good
institutional structures could help stimulate the level of financial markets development
in Africa. However, to attain this feat, African governments need to strengthen institutions
through effective enforcement of laws to foster compliance in a specifically
definite manner-by fashioning out costs for non-compliance
