Analysis of Pre- and Post-Global Financial Crisis Evidence Concerning Financial Incorporation and Stock Market Effectiveness

Abstract

Within the context of the 2008-2009 global economic crisis, the goal of this study is to look at the possible effects that informational efficiency may have on financial globalization and market microstructure. Ten developed and rising African markets make up the sample, which spans the years 2003 to 2012. The results, which were obtained using the same methods, reveal several intriguing aspects. First, markets with greater US market integration also tend to be more productive. Also, this large and favourable correlation is observed in both established and African stock market groupings. Secondly, the correlation between informational effectiveness and economic assimilation loses some of its descriptive power throughout the worldwide economic crisis when African developing markets seem to be more precarious than their developed equivalents. In general, the findings lend credence to the idea that the advantages of commercial integration for Africa could be substantial, which could entice overseas investors who are trying to maximize expected returns while minimizing risk.