Estimating the Cost of Not Having a Stock Exchange: A Synthetic Control Approach

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F70883521%3A28120%2F22%3A63536838" target="_blank" >RIV/70883521:28120/22:63536838 - isvavai.cz</a>
Result on the web
<a href="http://www.ijtef.com/index.php?m=content&c=index&a=show&catid=124&id=1108" target="_blank" >http://www.ijtef.com/index.php?m=content&c=index&a=show&catid=124&id=1108</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.18178/ijtef.2022.13.3.727" target="_blank" >10.18178/ijtef.2022.13.3.727</a>

Result language
angličtina
Original language name
Estimating the Cost of Not Having a Stock Exchange: A Synthetic Control Approach
Original language description
Despite the flourishment of the financial markets all around the world as a strategy of financial reforms in the last century, 20% of the world nations are still without a stock exchange. This study examines the economic cost of not having stock exchanges in one of the largest of these countries, Ethiopia. Using a transparent data-driven econometric technique - the synthetic control method (SCM), it estimates the counterfactual GDP per capita Ethiopia would have enjoyed, had it established stock exchange in 1998. Based on a weighted average of the preintervention characteristics and income per capita of similar countries with a stock exchange, SCM constructs synthetic control unit that imitates the characteristics of the treated unit in the pre-treatment period and compares the counterfactual outcome path against the actual outcome path of the treated unit. The estimation results indicate that the synthetically constructed Ethiopia outperformed actual Ethiopia in the posttreatment year, suggesting an establishment of a stock exchange in Ethiopia would have led to a substantial increase in income per capita of the country. Specifically, on average, Ethiopia’s GDP per capita would have been 54.84 percent higher over the period of 12 years had it established a stock exchange in 1998.
Czech name
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Czech description
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Publication year
2022
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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