The impact of domestic debt on private investment in Ghana.
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Date
2016-09
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KNUST
Abstract
Ghana’s domestic debt was at a high of GH 34,620.90 billion as of December 2014 since the beginning of HIPIC in 2000. This study was aimed at examining the impact of domestic debt on private investment levels in Ghana from the period 1993 to 2014. An investment function with five independent variables, which are public investment, domestic debt, GDP, interest rate and foreign direct investment were estimated by analysing the unit root test and cointegration test. The unit root test revealed that all the five of the variables in study were integrated of the order one, private investment was at levels and ARDL was used for the cointegration test in the long-run for the equation. The results showed that the high levels of domestic borrowing had a positive and significant impact on private investment in the long run and was positive but insignificant in the short run. The results showed that public investment impact on private investment was statistically positive and significant in the longrun but positive and insignificant in the short-run. Interest rates had a positive and significant impact on private investment in the long-run but was not statistically significant in the short run. GDP was positive and statistically significant in the long-run on private investment and statistically positive and significant in the short-run. FDI was positive and statistically significant in the long-run but positive and insignificant in the short-run. This study finds that the appropriate policy implementation can deal with the increasing domestic debt and the sale of domestic debt to all donors. The results from the study have shown that they have a strong implication on the management of fiscal status of the country as this will help the economy. This research seeks to assist in longitudinal studies by other researcher in the field of academia and be of strong value to all.
Keywords: Ghana, GDP, domestic debt, private investment
Description
A Thesis Submitted To The Department Of Accounting And Finance In Partial Fulfilment Of The Requirements For The Degree Of Master Of Philosophy Finance.