Abstract:
This study investigated the relationship between stock market
performance and economic growth in Ghana for the period 1991–2014, using
quarterly secondary data. The objective was to empirically analyse the
relationship between stock market performance and economic growth using
Auto regressive Distributed Lag (ARDL) approach.The study found
aco integrating relationship between economic growth and its determinants.
The regression results show that stock market performance is a very important
determinant of economic growth in Ghana since they exerted statistically
significant positive effects on economic growth both in the short-run and long run
in Ghana.Additionally, consumer price index and interest rate also exerted
negative and statistically significant effects on economic growth both in the
short-run and long-run in Ghana. Further,real effective exchange rate,physical
capital and labour force exerted positive and statistically significant effects on
economic growth both in the short-run and long-run in Ghana. It is therefore
recommended that policy makers specifically of Ghana Stock Exchange should
put pragmatic measures to improve the performance of the stock market,
increase physical capital, and labour force,as well as maintaining low
inflationary rate. Finally, Bank of Ghana should maintain a stable exchange
rate while financial institutions are to reduce their interest rate on lending.
