Fiscal Policy, Monetary Policy and Stock Market Development in Ghana

1
Seth Gyedu
Seth Gyedu
2
Joshua Nii Nyang Welbeck
Joshua Nii Nyang Welbeck
3
Stephen Appiah
Stephen Appiah

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GJMBR Volume 23 Issue C2

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The purpose of the paper is to investigate the influence of fiscal and monetary policy on stock market development in Ghana. The study adopted quantitative approach. Dynamic OLS regression technique was used for running the formulated model as well as Toda-Yamamoto Granger no-causality approach for the causal relationships. The first hypothesis fiscal policy (inflation) revealed a positive and significant effect on stock market development. The second hypothesis also revealed a negative and significant relationship between interest rate and stock market development. Monetary policy rate revealed a positive and significant relationship with stock market development. Thirdly, the causal model analyzed found two bi-directional relationships: between interest rate and monetary policy rate; and inflation and government revenue. The study recommends incorporate of both fiscal and monetary policies in a single model as their interaction exerts significant effect on the stock market development. Also, the study recommends moderate inflation which would propel the stock market to expand as the share prices increases.

Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Not applicable for this article.

Seth Gyedu. 2026. \u201cFiscal Policy, Monetary Policy and Stock Market Development in Ghana\u201d. Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 23 (GJMBR Volume 23 Issue C2): .

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Fiscal Policy, Monetary Policy & Stock Market.
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GJMBR Volume 23 Issue C2
Pg. 23- 39
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Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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GJMBR-C Classification: LCC: HJ257.2-HJ257.5
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v1.2

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July 21, 2023

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English

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The purpose of the paper is to investigate the influence of fiscal and monetary policy on stock market development in Ghana. The study adopted quantitative approach. Dynamic OLS regression technique was used for running the formulated model as well as Toda-Yamamoto Granger no-causality approach for the causal relationships. The first hypothesis fiscal policy (inflation) revealed a positive and significant effect on stock market development. The second hypothesis also revealed a negative and significant relationship between interest rate and stock market development. Monetary policy rate revealed a positive and significant relationship with stock market development. Thirdly, the causal model analyzed found two bi-directional relationships: between interest rate and monetary policy rate; and inflation and government revenue. The study recommends incorporate of both fiscal and monetary policies in a single model as their interaction exerts significant effect on the stock market development. Also, the study recommends moderate inflation which would propel the stock market to expand as the share prices increases.

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Fiscal Policy, Monetary Policy and Stock Market Development in Ghana

Seth Gyedu
Seth Gyedu
Joshua Nii Nyang Welbeck
Joshua Nii Nyang Welbeck
Stephen Appiah
Stephen Appiah

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