Impact of macroeconomic indicators on stock market performance: The case of the Ghana Stock Exchange
Abstract
Purpose
The study aims at examining how macroeconomic indicators affect the performance of stock markets by using the Ghana Stock Exchange as a case study.
Design/methodology/approach
Quarterly time series data covering the period 1991‐2005 were used. Cointegration and the error correction model techniques are employed to ascertain both short‐ and long‐run relationships.
Findings
Findings of the study reveal that lending rates from deposit money banks have an adverse effect on stock market performance and particularly serve as major hindrance to business growth in Ghana. Again, while inflation rate is found to have a negative effect on stock market performance, the results indicate that it takes time for this to take effect due to the presence of a lag period; and that investors benefit from exchange‐rate losses as a result of domestic currency depreciation.
Originality/value
The single most important contribution of this study is its emphasis on macroeconomic variables and stock market performance in a small country, since most studies have concentrated on stock markets and economic growth in advanced economies.
Keywords
Citation
Kyereboah‐Coleman, A. and Agyire‐Tettey, K.F. (2008), "Impact of macroeconomic indicators on stock market performance: The case of the Ghana Stock Exchange", Journal of Risk Finance, Vol. 9 No. 4, pp. 365-378. https://doi.org/10.1108/15265940810895025
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited