What Drives Government Security Yields in Developing Countries? Evidence from the Countries in the West African Economic and Monetary Union (WAEMU)

The purpose of this study is to analyze the determinants of government security yields in relation to the recent development of WAEMU government securities market. The determinants are grouped into three categories of factors; namely macroeconomic factors, microstructure factors, and the external factors. The results show that economic growth rate, as well as countries capacity to effectively organize government securities issuances, are the main drivers of government securities yields. The policy implication of the study is that WAEMU countries should monitor their economic performance and implement structural reforms in order to maintain sustained economic growth.