Macroeconomic Factors Influencing Stock Market Development in Ghana: An Empirical Analysis (1993 – 2023) | Chapter 6 | Business, Management and Economics: Research Progress Vol. 8

The aim of this study was to investigate the macroeconomic factors influencing Ghana's stock market's growth. Annual time series datasets spanning thirty years from 1993–2023 were among the data that could be obtained. Data on inflation (INF), exchange rates (EXR), money supply (M2), and monetary policy rate (MPR) were taken from the Bank of Ghana's statistical bulletins and the World Bank's Development Indicators (WDI) database. The autoregressive distributed lag (ARDL) model developed by [1] was utilized in this investigation. The investigation came to the following conclusions after estimating. The inflation negatively affected stock market growth, but was statistically insignificant. Furthermore, the growth of Ghana's stock market is unaffected by currency rates. Once again, exchange rates have a favourable impact on the growth of the stock market. According to our study, the development of the stock market is positively impacted by the monetary policy rate. The findings show that the money supply (M2) influences the growth of the stock market in a favourable way. The following recommendations were made by the study. First and foremost, decision-makers need to make sure that they implement measures to reduce the impact of inflation on the stock market. One way to achieve this is through inflation hedging. Additionally, since the exchange rate affects the stock market, it should be properly managed. This can be achieved by promoting increased foreign currency inflows into the capital market through increased foreign investment. Once again, monetary policy affects the evolution of the stock market. In order to encourage stock market investment, the policy rate had to be decreased. This is so because the traditional banking system cannot provide businesses with the same level of capital that the stock market can. Finally, strict regulation of the money supply is necessary to direct excess funds toward the stock market and spur growth.

 

Author (s) Details

Ibrahim, Zubairu
Department of Accounting & Finance, Accra Technical University, Accra, Ghana.

Patrick Akeba Atiawin
Centre for Global Economic Research, Accra, Ghana.

Benjamin Amoako Amanquah
Department of Accounting & Finance, Accra Technical University, Accra, Ghana.

 

Please see the book here:- https://doi.org/10.9734/bpi/bmerp/v8/2801