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Impact of macroeconomic indicators on stock market performance: The case of the Ghana Stock Exchange

Author

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  • Anthony Kyereboah-Coleman
  • Kwame F. Agyire-Tettey

Abstract

Purpose - The study aims at examining how macroeconomic indicators affect the performance of stock markets by using the Ghana Stock Exchange as a case study. Design/methodology/approach - Quarterly time series data covering the period 1991-2005 were used. Cointegration and the error correction model techniques are employed to ascertain both short- and long-run relationships. Findings - Findings of the study reveal that lending rates from deposit money banks have an adverse effect on stock market performance and particularly serve as major hindrance to business growth in Ghana. Again, while inflation rate is found to have a negative effect on stock market performance, the results indicate that it takes time for this to take effect due to the presence of a lag period; and that investors benefit from exchange-rate losses as a result of domestic currency depreciation. Originality/value - The single most important contribution of this study is its emphasis on macroeconomic variables and stock market performance in a small country, since most studies have concentrated on stock markets and economic growth in advanced economies.

Suggested Citation

  • Anthony Kyereboah-Coleman & Kwame F. Agyire-Tettey, 2008. "Impact of macroeconomic indicators on stock market performance: The case of the Ghana Stock Exchange," Journal of Risk Finance, Emerald Group Publishing, vol. 9(4), pages 365-378, August.
  • Handle: RePEc:eme:jrfpps:v:9:y:2008:i:4:p:365-378
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    Citations

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    Cited by:

    1. Ali Umar Ahmad & Adam Abdullah & Zunaidah Sulong & Ahmad Tijjani Abdullahi, 2015. "The Review of Stock Returns and Macroeconomic Variables," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(5), pages 154-181, May.
    2. Khaled Hussainey & Le Khanh Ngoc, 2009. "The impact of macroeconomic indicators on Vietnamese stock prices," Journal of Risk Finance, Emerald Group Publishing, vol. 10(4), pages 321-332, August.
    3. Charles K.D. Adjasi, 2009. "Macroeconomic uncertainty and conditional stock-price volatility in frontier African markets: Evidence from Ghana," Journal of Risk Finance, Emerald Group Publishing, vol. 10(4), pages 333-349, August.
    4. Muhammad Imtiaz Subhani & Syed Akif Hasan & Rabia Mohammad Ayub Moten & Amber Osman, 2011. "An Application of GARCH while investigating volatility in stock returns of the World," South Asian Journal of Management Sciences (SAJMS), Iqra University, Iqra University, vol. 5(2), pages 49-59, Fall.
    5. repec:rss:jnljee:v3i2p1 is not listed on IDEAS
    6. Pooja Joshi & A. K. Giri, 2015. "Cointegration and Causality between Macroeconomic variables and Stock Prices: Empirical Analysis from Indian Economy," Business and Economic Research, Macrothink Institute, vol. 5(2), pages 327-345, December.

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