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Stock Exchange Performance and Economic Growth in Ghana: Is There A Causal Link?

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  • Raymond K DZIWORNU
  • Dadson AWUNYO-VITOR

Abstract

This study empirically examined the causal link between stock exchange performance and economic growth in Ghana, using annual time series data over the period 1990-2012. Secondary data on the performance of the stock exchange: GSE-All Shares/composite Index was obtained from the Ghana stock exchange fact book, whiles that of economic growth was obtained from the Bank of Ghana Quarterly digest. The Granger causality test was employed to determine the causal link between GSE-All-shares/composite index and economic growth in Ghana. The study revealed that GSE-All shares/composite index grew by an average of 20.3 percent over the period. The result of Granger causality test shows that at 5 and 10 percent level of significance, there is a unidirectional causality between the Ghana stock exchange performance indicator and economic growth in Ghana. This suggests that changes in stock market performance precede that of economic growth. Therefore, in order to ensure rapid economic growth, policies which would ensure steady and sustainable growth in GSE-All shares/composite index should be encouraged.

Suggested Citation

  • Raymond K DZIWORNU & Dadson AWUNYO-VITOR, 2013. "Stock Exchange Performance and Economic Growth in Ghana: Is There A Causal Link?," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 3(9), pages 1152-1165.
    • Handle: RePEc:asi:ajoerj:v:3:y:2013:i:9:p:1152-1165:id:3595
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    Cited by:

    1. Ekundayo P. Mesagan & Isaac A. Ogbuji & Yasiru O. Alimi & Anthonia T. Odeleye, 2019. "Growth Effects of Financial Market Instruments: The Ghanaian Experience," Working Papers 19/095, European Xtramile Centre of African Studies (EXCAS).
    2. George Asumadu & Emmanuel Amo-Bediako, 2021. "Stock Market Performance and Economic Growth Nexus: A Panacea or Pain to Ghana?," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(4), pages 423-429, April.
    3. Isaac Azubuike Ogbuji & Ekundayo Peter Mesagan & Yasiru Olorunfemi Alimi, 2020. "The Dynamic Linkage between Money Market, Capital Market and Economic Growth in Ghana: New Lessons Relearned," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 5(2), pages 59-78, December.

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