IDEAS home Printed from https://ideas.repec.org/p/aer/rpaper/rp_076.html
   My bibliography  Save this paper

Analysis of the Factors Affecting the Development of an Emerging Capital Market:The Case of the Ghana Stock Market

Author

Listed:
  • Kofi A. Osei

Abstract

The study looks at the institutional factors affecting the development of the Ghana stock market. Additionally, the study analyses the impact of the listing of Ashanti Goldfields corporation on the development of the Ghana stock market. The study establishes that the institutional factors particularly the legal and regulatory framework that ensure the protection and security of investors are in place, and that the call-over system of transactions is very transparent. The study also finds that the delivery and settlement of transactions are performed satisfactorily by brokers, however the introduction of a centralized clearing system would significantly improve upon the clearing and settlement procedures. The study further establishes that the entry into and exit from the GSE are without any significant restrictions. Analysis of the structure of the GSE shows among others that many of the local investors can be described as low income investors. A sizeable percentage has no formal education and the knowledge of local investors about tbe capital market is quite poor. Foreign investors have come from Europe, America, the Far East etc. With the exception of Nigeria, no foreign investors on the GSE have come from sub-Saharan Africa. Using the law of one price and the random walk test, the study establishes that the GSE is "weak-form" inefficient. Additionally, the study finds that the listing of AGC has had tremendous impact on the GSE in many ways including improving market liquidity and market turnover. The study recommends a campaign to educate the Ghanaian public about the activities of the GSE and to promote investment in general. There is need for the government to give fiscal incentives in the form of taxation in favour of listed companies, and to pursue prudent macroeconomic policies, particularly in the area of inflation management. A regular review of the legal and regulatory framework within which the investment laws operate is necessary to boost the confidence of investors.

Suggested Citation

  • Kofi A. Osei, 1998. "Analysis of the Factors Affecting the Development of an Emerging Capital Market:The Case of the Ghana Stock Market," Research Papers RP_076, African Economic Research Consortium.
  • Handle: RePEc:aer:rpaper:rp_076
    as

    Download full text from publisher

    File URL: http://www.aercafrica.org/documents/RP76.pdf
    Download Restriction: no

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aer:rpaper:rp_076. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Steven Kinuthia). General contact details of provider: http://edirc.repec.org/data/aerccke.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.