Macroeconomic determinants of the Ghana stock exchange market performance
Loading...
Date
June, 2016
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This research looks at the profound impact of certain macroeconomic variables on the
performance of the of Ghana Stock Exchange All share index, and therefore use the
outcome to predict how the GSE performance would behave if there is a slight or greater
change in the macroeconomic variables. The popular co- integration method was employed
for the methodology and an annual data for both the GSE All share index and the five
macroeconomic variables namely, interest rate, inflation, money supply, real GDP,
exchange rate from 1990 to 2012 to ascertain how changes in the variables affect the GSE
performance. The research finally attains a level where there is a long run equilibrium
relationship existing between the dependent and independent variables (GSE All share
index and the five macroeconomic variables). Also it was established that the effect of the
macroeconomic variables on the Ghana stock Exchange in the short run is almost
imaginary. The results show that real interest rate (RIR), Exchange rate (EXCH), Inflation
rate (INF) and Real GDP have a negative impact on Ghana Stock Exchange (GSE). Money
supply (M2) is the only variable that has a positive impact on Ghana Stock Exchange in
the Short run. Exchange rate (EXCH), Inflation rate (INF) and Real GDP are statistically
significant but the rest are insignificant. It therefore worthy to recommend that prospective
investors are very particular about the fluctuations in the exchange rate and of course the
interest rate. This is because these two determine whether the economy is fertile to invest
in or otherwise since their changes has a repining or long run effect on the GSE.
Description
A Thesis submitted to the Department of Economics of the College of Social Sciences and Humanities, Kwame Nkrumah University of Science and Technology, in partial fulfillment of the requirement for the award of Master of Science Degree in Economics.