Effect of Stock Market Dynamics on Economic Growth: Evidence from Ghana Stock Exchange

Rebecca Attah-Annor and Alhassan Bunyaminu

International Journal of Financial Markets, 2016, vol. 2, issue 3, 69-93

Abstract: The purpose of this study was to examine the effect of stock market dynamics on economic growth. It relied on a quantitative time series approach, using real GDP as a measure of economic growth and aggregate stock price index, stock volume, stock value traded and market capitalization as proxies of Ghana stock exchange performance. Data was collected for 13 years (2000-2012) on all variables. The study employed Vector Error Correction Models (VECM) and Granger Causality Models to analyze the short and long run relationships between development of the Ghana Stock Exchange and economic growth in Ghana. The study found that the development of the Ghana Stock Exchange has short and long-run impacts on economic growth with a bi-directional causality between stock market development and economic growth. The study recommended, for further studies, an analysis of the long-run and short-run impact of Ghana Stock exchange performance on macroeconomic variables.

Keywords: Gross Domestic Products; Vector Error Correction Models; Ghana Stock Exchange; economic growth (search for similar items in EconPapers)
Date: 2016
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