Does Stock Market Development Promote Economic Growth in Ghana?

Abstract

The study investigates whether the stock market in Ghana contributes to the growth of the Ghanaian economy using quarterly data (2006Q1–2013Q2). A bounds testing approach to cointegration and Granger causality in the vector error correction model are used for analysis. The results of the cointegration analysis indicate that there is a long-run cointegrating relationship between stock market development and economic growth. The results of the causality analysis demonstrate that there is a unidirectional causality running from stock market development to economic growth. However, since the long-run regression analysis shows a negative relationship between stock market development and economic growth, we conclude that stock market development does not promote economic growth in Ghana.

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