• Macroeconomic determinants of stock market performance in Ghana

    Author(s):

    Nana K. Akosah1


    Emailnana.akosah@bog.gov.gh & akosahk@gmail.com
    2024-08-01 06:26:57

    88 Downloads 163 Views

    Abstract

    The paper examines macroeconomic determinants of stock market performance in Ghana for the period 2000Q2-2014Q1, using a battery of time series models. The empirical result established that financial deepening, real GDP growth, foreign direct investment, current inflation and election cycles stimulate stock market development in both short and long run. On the other hand, Treasury bill rate, government expenditure and country risk premium were found to have deleterious impact on stock market development in both short run and long run. However, the effect of nominal exchange rate depreciation on stock market performance was found to be negative in the short run but positive in the long run. In contrast, the long run impact of openness to international trade on stock market development was negative, while the short run effect of the former on the latter was mixed. The study therefore recommends coordinated fiscal and monetary policies that guarantee a sustained macroeconomic stability, and reflecting low and stable prices (foreign exchange rate, short-term money market interest rates and inflation). The attainment of these goals is essential to minimize the uncertainties and systemic risks, while enhancing public’s confidence in holding long term financial assets and also strengthening foreign inflows.   

    Keywords
    Stock Market Development, Macroeconomic Determinants, ARDL Model, Ghana Stock Exchange.

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