This paper aims at critically analyzing the impact of financial markets in trying to influence the magnitude and direction of economic growth as they purpose to intermediate funds between surplus spenders and deficit spenders within East Africa. Some of the past researches have revealed that the performance of financial markets have a significant impact on the growth of economy. We examine how the money markets, corporate and Government Bond markets, the stock markets impact on the growth of the economy within East Africa. We model our problem to incorporate financial markets operations, capital flows from foreign nations and the local market capital structure to depict their influence in the level of economic growth within East Africa. It involved conducting a systematic review of literature papers in the field of financial markets through content analysis to draw conclusion and recommendations. Governments especially in less developed countries need to enhance and develop robust financial markets in order to realize the full potential of foreign direct investment. Financial markets act as linkages between the foreign financial markets and the economy. With better managed financial markets, the spillovers from direct foreign investment are capable of influencing great economic development in host countries.
This work by European American Journals is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License