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The Effect of Stock Market Performance on Economic Growth in Ghana

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  • Gladys A. A. Nabieu
  • Charles Barnor

Abstract

The purpose of this study was to examine the effect of stock market performance on economic growth in Ghana using time series data from 2000 to 2012. Quarterly Data was collected for thirteen 13 years from (2000 to 2012) on all variables. The study employed Vector Error Correction Model (VECM) and Granger Causality test to analyze the short and long run relationships between stock market performance and economic growth in Ghana. The study revealed stock market performance had positive effect on economic growth in the short and long-run periods. Causality test of stock market performance on economic growth indicated a bi-causality between the two variables implying interdependence between stock market performance and economic growth with a bi-directional causality between stock market development and economic growth. Hence, stock market (GSE) stimulates economic growth and economic growth influences stock market development. Therefore, policies aim at stock market development should be enhanced to promote economic growth.

Suggested Citation

  • Gladys A. A. Nabieu & Charles Barnor, 2016. "The Effect of Stock Market Performance on Economic Growth in Ghana," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 5(1), pages 12-32.
    • Handle: RePEc:rss:jnljfe:v5i1p2
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