Anokye M. Adam

Macroeconomic Factors and Stock Market Movement: Evidence from Ghana

This study examines the role of macroeconomic variables on stock prices movement in Ghana. We use the Databank stock index to represent Ghana stock market and (a) inward foreign direct investments, (b) the treasury bill rate (as a measure of interest rates), (c) the consumer price index (as a measure of inflation), and (d) the exchange rate as macroeconomic variables. We analyze both long-run and short-run dynamic relationships between the stock market index and the economic variable with quarterly data for the above variables from 1991.1 to 2006.4 using Johansens multivariate cointegration test and innovation accounting techniques. We established that there is cointegration between macroeconomic variables identified and Stock prices in Ghana indicating long run relationship. Results of Impulse Response Function (IRF) and Forecast Error Variance Decomposition (FEVD) indicate that interest rate and Foreign Direct Investment (FDI) are the key determinants of the share price movements in Ghana.

Can Stocks Hedge Against Inflation in the Long Run: Evidence from Ghana Stock Market

Based on Fisher (1930) hypothesis, we test whether Ghana stock market can hedge against inflation in the long run using cointegration analysis. Using data for the Databank stock Index (DSI) from January 1991 to December 2007, the results give strong support for the hedge property. Thus Ghana stock market provide full hedge against inflation. The outcome of this study hold important lesson for the market participants in developing market (many of which have experienced decades of inflation) higher current inflation may not necessarily be associated with expectations of lower future returns

Implications of Oil Price Shocks for Monetary Policy in Ghana: A Vector Error Correction Model

We estimate a Vector Error Correction Model to explore the long run and short run linkages between the world crude oil price and economic activity in Ghana for the period 1970:1 to 2006:4. The results point out that there is a long run relationship between the variables under consideration. We find that an unexpected oil price increase is followed by an increase in price level and a decline in output in Ghana. We argue that monetary policy has in the past been with the intention of lessening negative growth consequences of oil price shocks, at the cost of higher inflation.

Co-movement of real exchange rates in the West African Monetary Zone

Abstract In three different ways of lead–lag causal relationship, covariance/correlation and coherence, we apply the wavelets analysis via the Continuous Morlet Wavelet Transform to delineate the significant frequency–time domain lead–lag relationships for the West African Monetary Zone member countries for real US dollar exchange rates and their absolute log returns from January 2001 to April 2015. The results indicate that lead–lag associations at different periodicities vary across the countries. No one country comes off as leading conveniently for both real and absolute returns of the exchange rates. Our results corroborate other evidences of non-convergence of exchange rates in the monetary zone, which hinders the eventual implementation of the single currency in the ECOWAS region.

Financial Liberalization and Growth in Ghana: An Application of the ARDL Bounds Testing Approach

In this paper we examined the impact of the liberalization of financial sector on growth in small open economy of Ghana using time series data from 1970 to 2007. Using autoregressive distributed lag (ARDL) modelling approach we find long-run positive and significant impact of financial liberalization on per capita GDP growth.

Does gender disparity in financial literacy still persist after retirement? Evidence from Ghana

Purpose The purpose of this paper is to examine the gender disparity in financial literacy among retirees in the Cape Coast metropolis in Ghana. Design/methodology/approach Finding of this paper is based on 334 respondents (183 males and 151 females) to financial literacy questionnaires covering the respondents’ general knowledge on budgeting, use of Automated Teller Machine (ATM), time value of money, account types, cheque handling and insurance. Data was analysed with Pearson Chi-Square and Independent sample t-test. Findings Nominal scores showed male domination in financial literacy in seven out of the ten questions used to assess financial literacy while female retirees lead in three. These observed nominal differences were, however, found not to be significant through Chi-square test of independence except the question on the calculation of interest rate on loans in favour of males. The cumulative effect, through computation of financial literacy index was deemed to be significantly different betwee...

WORKING CAPITAL MANAGEMENT POLICIES AND RETURNS OF LISTED MANUFACTURING FIRMS IN GHANA

Abstract This study sought to determine the effects aggressive/conservative current asset investment and financing policies have on firms′ return for six manufacturing firms listed at Ghana Stock Exchange for a period of 2000-2013. Data were obtained from the annual reports of the firms and the Ghana Stock Exchange. The study adopted longitudinal explanatory non-experimental research design applied to dynamic panel ARDL framework in analyzing the data. The results revealed that the current asset investment and financing policies have highly significant positive effects on returns to equity holders in the long-run. The empirical evidence suggests that conservative current asset investment policies increase firms return while conservative financing policies yields negative returns. The study therefore would enable finance managers to be able to fashion out the appropriate working capital management policies. A firm pursuing conservative current asset investment policy should balance it with aggressive current asset financing policy in order to enhance profitability and create value for their investors.

The currency union effect on intra-regional trade in Economic Community of West African States (ECOWAS)

Purpose – The purpose of this paper is to investigate the currency union (CU) effect on aggregate intra-trade in the Economic Community of West African States (ECOWAS) and on bilateral trade among individual countries using the gravity model. Design/methodology/approach – Using panel dynamic ordinary least square, we examined the short- and long-run CU effect on aggregate intra-ECOWAS trade and bilateral trade among ECOWAS countries from 1995 to 2010. Chow poolability test was conducted for the appropriateness of pooling the cross-section parameters as against individual model. The augmented Dickey–Fuller (ADF) test; the Phillips–Perron (PP) test; and the Kwiatkowski, Phillips, Schmidt and Shin (KPSS) test were conducted on the individual data series, and the Levin, Lin and Chu test; the Im, Pesaran and Shin test; the Breitung test; and the Hadri test were used for testing cross-sectional independent panel unit root tests. Kao panel cointegration test was conducted to identify long-run relationships. Find...

Exchange Pass-Through in Ghana

The paper examines the effect of exchange rate changes on consumer prices in Ghana using vector autoregression (VAR) models. Using a data set covering the period 1990M01-2009M02, we find that the exchange rate pass-through to inflation is ‘incomplete’ and decreasing in Ghana. Our empirical results indicate a low but significant pass-through in the short run. We argue that the findings reflect the impact of increased openness and tighter monetary policy pursue by the central bank over the period.

The Changing Trade Pattern of Emerging Economies: Gravity Model of Ghana's Trade Flow

This paper applies the augmented gravity model to study the changing pattern of Ghanas bilateral trade flows and to extract practical trade policy implications. Economic classification dummies are included in the gravity equation to characterize the peculiarity of South-South and North-South trade patterns. The result indicates that Ghanas trade especially the export sector has greater trading potential with the emerging and developing economies than the high income economies.