ABSTRACT
Introduction Having looked at the current state of development and regulation of capital markets in the SADC region, which may be regarded as representative of the state of capital market development and regulation in many African and other developing countries, this chapter seeks to explore the mechanics of institutional change, which is crucial to the effective design and implementation of capital market reforms in developing countries. We shall therefore start by looking at the process of institutional change according to North’s framework. We shall then explore practical ways through which formal and informal rules may be changed and the practical problems that result from the interaction of formal and informal rules and their effect on institutional reform. We shall also examine some suggested theories for achieving efficiency-friendly institutional change. Finally we shall look at some practical examples of institutional development within North’s framework.
