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Growth Effects of Financial Market Instruments: The Ghanaian Experience

Author

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  • Ekundayo P. Mesagan

    (Pan-Atlantic University, Lagos, Nigeria)

  • Isaac A. Ogbuji

    (University of Lagos, Nigeria)

  • Yasiru O. Alimi

    (University of Lagos, Nigeria)

  • Anthonia T. Odeleye

    (University of Lagos, Nigeria)

Abstract

This study analyses the growth effects of financial market instruments in Ghana between 1991 and 2017. We use the ARDL bounds testing approach to analyse data on real GDP per capita, monetary policy rate, treasury bill rate, stocks traded, bank credits, stock turnover, market capitalisation, foreign direct investment, and gross investment. Findings show the existence of a long-run relationship between both short- and long-term financial market indicators and economic growth. Also, results confirm that long-term financial instruments perform better than the short-term instruments in boosting the country’s economy in the short-run, while in the long-run, both short-term and long-term financial indicators positively impact economic growth in Ghana. We recommend that the bank of Ghana should consider lowering the bank rate further from the current annual rate of 16.0% to enhance bank credits, boosts domestic investment, and improve growth in the long-run.

Suggested Citation

  • Ekundayo P. Mesagan & Isaac A. Ogbuji & Yasiru O. Alimi & Anthonia T. Odeleye, 2019. "Growth Effects of Financial Market Instruments: The Ghanaian Experience," Research Africa Network Working Papers 19/095, Research Africa Network (RAN).
    • Handle: RePEc:abh:wpaper:19/095
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    Cited by:

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    2. Ismaila Akanni Yusuf & Agatha Nkem Amadi & Mohammed Bashir Salaudeen, 2020. "Effects of Risk Culture and Appetite on Effective Risk Management in Nigerian Banks: Case Study of United Bank for Africa Plc," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(2), pages 81-87, June.
    3. Ismaila Akanni Yusuf & Mohammed Bashir Salaudeen & Isaac Azubuike Ogbuji, 2022. "Exchange Rate Fluctuation and Inflation Nexus in Nigeria: The Case of Recent Recession," Journal of Economic Impact, Science Impact Publishers, vol. 4(1), pages 81-87.
    4. Olukunle Samuel Olaniran & Olusola Olakunle Ogunjinmi, 2022. "Modelling the Impacts of Agricultural Outputs and its Components on Human Mortality Rate in Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 11(1), pages 146-160, January.
    5. Olorunfemi Yasiru Alimi & Akinola Christopher Fagbohun & Mohammed Abubakar, 2021. "Is population an asset or a liability to Nigeria’s economic growth? Evidence from FM-OLS and ARDL approach to cointegration," Future Business Journal, Springer, vol. 7(1), pages 1-12, December.

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    More about this item

    Keywords

    Financial Market Instruments; Market Capitalisation; Economic Growth; ARDL Bounds Test;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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