Corporate Bond Issuance Behaviour in African Emerging Markets

Abstract

ABSTRACT This study informs the largely neglected literature on the probability of corporate bond issuance in African emerging markets by determining which firm-level variables – size, risk, profitability, tangibility of assets, leverage, growth opportunities, and age – influence private-sector firms’ decision to issue bonds in the primary market. Using data for 49 non-financial firms – 32 bond issuers and 17 non-issuers – between January 2009 and December 2014, the pooled fractional probit regression technique is adopted with the Bernoulli quasi-maximum likelihood estimator (BQMLE) to identify risk, leverage, size, and age as the most important. The study further contributes to the literature by its finding that differences exist between corporate bond issuing and non-issuing firms in Africa. It recommends the need to foster the debt credit culture for the development of local debt markets on the continent.