A Reassessment of Stock Market Integration in SADC: The Case of Namibia

A major feature of development policy modelled on neoclassical notions of financial market integration is that a wide array of smaller markets can benefit from integration by pooling resources and attracting foreign capital to supplement otherwise low levels of domestic investment. However, evidence from Namibia and South Africa suggest that the smaller markets become regulatory price-takers and to maintain the benefits from integration, face prohibitively high costs. We find evidence that the current policy initiatives of regional integration impose costs on smaller, less developed exchanges, which are ultimately borne by local firms seeking cost-effective sustainable external finance.