Mbodja Mougoué published in finance and economics journal

Mike Ilitch School of Business Associate Professor of Finance Mbodja Mougoué had two articles published in the International Journal of Finance and Economics (IJFE).

IJFE publishes “articles of high quality dealing with issues in international finance which impact on national and global economies.”

Mougoué’s article, “The Democracy Income-growth Nexus in the Southern African Development Community Revisited,” discusses the link between democracy and income growth in the Southern African Development Community regional bloc.

His co-authors were Eugene Kouassi, Sandotin Coulibaly and Oluyele Akinkugbe.


This paper uses a dynamic panel model to examine the link between democracy and income growth in the Southern African Development Community regional bloc. The democratic capital stock, which captures the nurturing and strengthening of the policy and decision-making environment and processes, as well as other social institutions in a nation, regardless of the degree of technological development is used as a proxy for democracy. This distinguishes our approach from earlier studies of this nature, particularly for developing countries of sub-Saharan Africa. Our results suggest that democracy has no direct impact, and perhaps no impact at all on income growth, even though there appears to be many complementarities between democratic institutions and the immediate ingredients of economic development. The results of our analysis are also robust to alternative definitions of democracy. Moreover, the conflictual signals that derive from our sensitivity analyses using the indices of ethnolinguistic fractionalization and the politically relevant ethnic groups further strengthen the nature of the complexities associated with the debate on democracy and income growth in developing countries. In the absence of the democracy variable, our analysis reveals that income growth is significant, even with high ethnolinguistic fractionalization. These no doubt call for additional inquiries and methodological constructs in the income-growth democracy nexus literature.

Mougoué’s second article published in IJFE, “Effects of Diamond Price Volatility on Stock Returns: Evidence from a Developing Economy,” discusses the effects of diamond price volatility on stock returns in Botswana.

His co-authors were JM Bosson Brou, Eugene Kouassi, Kebaabetswe Thulaganyo and Benjamin Acquah.


High diamond price volatility can have a significant impact on Botswana’s diamond-driven economy. The global economic crisis of 2008-09 saw the local economy characterized by heightened commodity price uncertainty, falling stock prices, and dwindling international demand for diamonds. In this paper, we employ a number of techniques to analyze and assess the effect of diamond price volatility on stock returns in Botswana. Firstly, estimation of a Markov Switching model reveals that high volatility regimes in diamond prices have become more frequent and persistent since the recession. Secondly, a bivariate GARCH-in-Mean VAR model is estimated and the results recognize that diamond price volatility has a positive and significant influence on stock returns in Botswana.

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