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Prospects for International Portfolio Diversification: Linkages Between the Ghanaian Equity Market and the World's Major Markets


  • Abdulsalam Alhassan

    () (Youngstown State University (YSU))


Despite increased co-movements in stock performance among developed economies, international portfolio investors have failed to diversify into African stock markets. Is the persistence of home bias in equities due to a possibility that African markets move in tandem with the rest of the world? This paper investigates linkages between the Ghanaian equity market and the world’s major markets using co-integration and error correction analyses. There is no evidence of linkages between the Ghanaian equity market and the world major equity markets. Results are conclusive for both short and long run relationships. Ghana therefore offers the potential for international portfolio investors.

Suggested Citation

  • Abdulsalam Alhassan, 2006. "Prospects for International Portfolio Diversification: Linkages Between the Ghanaian Equity Market and the World's Major Markets," The African Finance Journal, Africagrowth Institute, vol. 8(1), pages 1-13.
  • Handle: RePEc:afj:journl:v:8:y:2006:i:1:p:1-13

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    Co-Integration; Error Correction; International Portfolio Diversification; Ghana Stock Exchange;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets


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