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Foreign Direct Investment (FDI) and Stock market Development: Ghana Evidence

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  • Adam, Anokye M.
  • Tweneboah, George

Abstract

Using multivariate cointegration and Innovation Accounting Methods, this paper examines the impact of Foreign Direct Investment (FDI) on stock market development in Ghana. The paper finds long-run relationship between FDI and stock market development in Ghana. Using impulse responses and Variance Decomposition from Vector Error Correction Model we find that shocks in FDI significantly influence the development of stock market in Ghana

Suggested Citation

  • Adam, Anokye M. & Tweneboah, George, 2008. "Foreign Direct Investment (FDI) and Stock market Development: Ghana Evidence," MPRA Paper 11261, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:11261
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    References listed on IDEAS

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    1. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    2. Demirguc-Kunt, Ash & Levine, Ross, 1996. "Stock Market Development and Financial Intermediaries: Stylized Facts," The World Bank Economic Review, World Bank, vol. 10(2), pages 291-321, May.
    3. Morris Goldstein & Mohsin S. Khan, 1976. "Large versus Small Price Changes and the Demand for Imports (Demande d'importation et modification forte ou faible des prix) (Grandes y pequeñas variaciones de precios y la demanda de importación)," IMF Staff Papers, Palgrave Macmillan, vol. 23(1), pages 200-225, March.
    4. Pesaran, H. Hashem & Shin, Yongcheol, 1998. "Generalized impulse response analysis in linear multivariate models," Economics Letters, Elsevier, vol. 58(1), pages 17-29, January.
    5. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    6. World Bank, 2004. "World Development Indicators 2004," World Bank Publications - Books, The World Bank Group, number 13890.
    7. Charles Komla Adjasi & Charles Amo Yartey, 2007. "Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges," IMF Working Papers 2007/209, International Monetary Fund.
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    Cited by:

    1. M. Olufemi Saibu, 2012. "An analysis of causal nexus between foreign direct investment, exchange rate and financial market development in Nigeria (1970 to 2009)," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 1(1), pages 95-102.
    2. Asaad, Zeravan, 2014. "The Economic determinants of foreign direct investment inward to Iraq for period (2004-2011)," MPRA Paper 103523, University Library of Munich, Germany, revised 04 Apr 2014.
    3. Yavas, Burhan F. & Malladi, Rama K., 2020. "Foreign direct investment and financial markets influences: Results from the United States," The North American Journal of Economics and Finance, Elsevier, vol. 53(C).
    4. Rakesh Parkash & Samina Riaz & Muhammad Akram & Muhammad Ali, 2022. "Does Corruption Negatively Impact Economic Growth Of A Country? Evidence From Bric Countries," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 11(2), pages 302-312.
    5. Gbenga Festus Babarinde, 2020. "The Role of Foreign Direct Investment in Stock Market Development in Nigeria: A Test of Complementarity," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 12(2), pages 175-187, December.
    6. Gbalam Peter Eze & Ekokeme, Tamaroukro Timipere, 2020. "Foreign Direct Investment and Stock Market Development in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(2), pages 136-141, February.
    7. Malik, Saif Ullah, 2013. "Role of Foreign Private Investment and Remittance in Stock Market Development: Study of South Asia," MPRA Paper 54530, University Library of Munich, Germany.
    8. Tran, Thi Bich Ngoc, 2017. "Speculative bubbles in emerging stock markets and macroeconomic factors: A new empirical evidence for Asia and Latin America," Research in International Business and Finance, Elsevier, vol. 42(C), pages 454-467.
    9. Aastha Khera & Neelam Dhanda, 2020. "Empirical Relationship between Macroeconomic Variables and Stock Prices of Indian Banking Sector: A Vector Error Correction Model Approach," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 12(2), pages 189-198, December.

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    More about this item

    Keywords

    Stock Market Development; Foreign Direct Investment and Market Capitalization;

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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