The impact of stock markets on corporate finance: the case of Ghana Stock Exchange

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A lot of theories provide a conceptual basis for the assertion that larger, more efficient stock markets provide an avenue for business firms to access cheap, long-term capital for the pursuit of their developmental goals, and ultimately, boost economic growth. This study examines whether there is a strong empirical association between the Ghana Stock Exchange (GSE) and long-run economic growth in Ghana. Empirical evidence gathered from nations with efficient exchanges suggest that stock market development is positively and robustly associated with long-run economic growth. However, our findings indicate that although the companies listed on the GSE have registered enormous growth during the period under review, much of the growth registered in the small, private firms (which constitute over 80% of companies in Ghana) has been financed through borrowed capital and retained profits. Furthermore, the expectation of many Ghanaians as far as generation of investor interest and company listing on the market has not been adequately met. The study establishes, however, that given the necessary support, especially in the area of relaxing enlistment requirements and investor awareness creation, the GSE will play its rightful role as a vehicle for the mobilisation of cheap, long-term capital for the economic development of the nation as a whole.  
A dissertation presented in partial fulfilment of the requirements for the award of Master of Arts, Industrial Management, 2008