Samuel Antwi, Mohammed Issah and Richard Kpodo

Correspondence: Mohammed Issah, mohammed.issah@upsamail.edu.gh

Department of Accounting, University of Professional Studies, Ghana

pdf (720.09 Kb) | doi: https://doi.org/10.47260/bae/824

Abstract

The aim of this study is to determine the role of monetary policy on the stock market and economic growth nexus in Ghana. The study used annual time series macroeconomic and stock market data from the year 1990 to 2019. Secondary data was collected on Gross Domestic Product (GDP), market capitalization (MC), Commercial bank (CB), inflation (INF), labour (L), capital stock (K), and trade openness (TO). Inflation was measured with consumer price index (CPI), and broad money (M2) were examined. The ARDL cointegration bounce test approach was used. It was revealed that stock market development has a significant positive effect on economic growth both in the short and long run. The study also found a support for a positive and significant nexus between monetary policy and economic growth. Based on the results it is suggested that efforts must be mounted to increase the number of firms to be listed to promote liquidity and raise the size of the market via capitalization ratio.

Keywords:

  Stock Market, Economic Growth, Monetary Policy, Ghana

References

Adusei, M. (2014). Does stock market development promote economic growth in Ghana? International journal of economics and finance, 6(6), 119-126Antonios, A. (2010). Stock Market and Economic Growth: An Empirical Analysis for Nigeria. Business and Economics Journal, 1–12. https://doi.org/10.2139/ssrn.3402423Asante, S., Agyapong, D., & Adam, A. M. (2011). Bank Competition, Stock Market and Economic Growth in Ghana. International Journal of Business Administration, 2(4), 33–41. https://doi.org/10.5430/ijba.v2n4p33Asamoah, G. (2018). Impact of Ghana Stock Exchange Development on       Economic Growth: A Robust Time Series Econometric Analysis. Interdisciplinary Research Journal of Theology, Apologetics, Natural and Social Sciences, Vol.1, No.1&2.Akinlo, O. O. (2014). Oil price and stock market: Empirical evidence from Nigeria. European Journal of Sustainable Development, 3(2), 33-33.Alajekwu, U. B., Ezeabasili, V. N., & Nzotta, S. M. (2013). Trade openness, stock market development and economic growth of Nigeria: Empirical evidence. Research Journal of Finance and Accounting, 4(3), 120-127.Bayar, Y., Kaya, A., & Yildirim, M. (2014). Effects of stock market development on economic growth: Evidence from Turkey. International Journal of Financial Research, 5(1), 93.Bjørnland, H. C., & Leitemo, K. (2009). Identifying the interdependence between US monetary policy and the stock market. Journal of Monetary Economics, 56(2), 275-282.Christiano, L., Ilut, C. L., Motto, R., & Rostagno, M. (2010). Monetary policy and stock market booms (No. w16402). National Bureau of Economic Research.Derk, N. (2020). Stock Market and Economic Performance in Malaysian Context. Finance & Accounting Research Journal, 2(2), 82-90.Enisan, A. A., & Olufisayo, A. O. (2009). Stock market development and economic growth: Evidence from seven sub-Sahara African countries. Journal of economics and business,   61(2), 162-171.Hoque, M. E., & Yakob, N. A. (2017). Revisiting stock market development and economic growth nexus: The moderating role of foreign capital inflows and exchange rates. Cogent   Economics & Finance, 5(1), 1329975.Kapaya, S. M. (2020). Stock market development and economic growth in Tanzania: an ARDL and bound testing approach. Review of Economics and Political Science.Ngare, E., Nyamongo, E. M., & Misati, R. N. (2014). Stock market development and economic growth in Africa. Journal of Economics and Business, 74, 24-39.Nzomoi, J. N., & Ikikii, S. M. (2013). An analysis of the effects of stock market development on economic growth in Kenya.Onyeiwu, C. (2012). Monetary policy and economic growth of Nigeria. Journal of Economics and Sustainable development, 3(7), 62-70.Olweny, T. O., & Kimani, D. (2011). Stock market performance and economic growth Empirical Evidence from Kenya using Causality Test Approach. Advances in Management and Applied Economics, 1(3), 177.Osamwonyi, I. O., & Kasimu, A. (2013). Stock market and economic growth in Ghana, Kenya and Nigeria. International Journal of Financial Research, 4(2), 83.Qamruzzaman, M., & Wei, J. (2018). Financial innovation, stock market development, and economic growth: An application of ARDL model. International Journal of Financial Studies, 6(3), 69.Rajabi, E., & Muhammad, J. (2014). The stock markets, banks and growth nexus: Asian Islamic countries. Economic Notes: Review of Banking, Finance and Monetary Economics, 43(2), 137-165.Rehman, M. Z. (2018). Banking sector development, stock market development and economic growth: Evidence from Saudi Arabia. Academy of Accounting and Financial Studies Journal, 22(4), 1-15.Saibu, M. O., Bowale, K. E. I., & Akinlo, A. E. (2009). Financial Structure and economic growth: empirical evidence from Nigeria. International Journal of Business and Emerging Markets, 1(3), 264-281.Thorbecke, W. (1997). On stock market returns and monetary policy. The Journal of Finance, 52(2), 635-654.Ioannidis, C., & Kontonikas, A. (2008). The impact of monetary policy on stock prices. Journal of policy modeling, 30(1), 33-53.Zivengwa, T., Mashika, J., Bokosi, F. K., & Makova, T. (2011). Stock market development and economic growth in Zimbabwe. International Journal of economics and Finance, 3(5), 140-150.