Stock Market in Sudan : Thirteen Years of Experience

Abstract

For more than two decades stock markets have boomed in just about every developing country. This stems from the recognition that the establishment of financial institutions, primarily stock markets, is essential for the generation of the requisite capital for economic development and growth. A develop stock market, as concluded by many articles on stock markets, is as important to national economic growth as banks. Though each provides a different set of important services, they both stimulate the accumulation of capital and contribute to improvements in productivity.

The purpose of this paper is to investigate the extent to which the Sudanese stock market has succeeded in performing its functions including being a mechanism through which public funds and credits can be channeled for development purposes. The investigation covers the period 1995 – 2007.

Since there exists no theory of financial market development, the empirical indicators of stock market development assembled by the World Bank researchers and constructed by the International Finance Corporation, are used to measure the level of development of the capital market in Sudan. The principal measures used are measures of activity as well as measures of the institutional determinants of conditions under which securities are traded. To measure the achievements of KSE in terms of the crucial issue of capital mobilization three ratio measures are suggested in this paper.

The results obtained from this empirical study reveal the poor performance of the Sudanese capital markets. In terms of all stock market development indicators as well as new measures suggested by this paper, the KSE is a very limited and undeveloped market