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THE EFFECTS OF INTEREST RATE ON STOCK MARKET; EMPIRICAL EVIDENCE FROM THE GHANA STOCK EXCHANGE


Agyemang Kwasi Sampene, Cai Li, Hairong Cui, Abredu Pearl, Oteng Agyeman Fredrick, Brenya Robert, Abraham Lincoln Ayisi
China, Jiangsu University,
Abstract
This paper examines the impact of interest rates on the Ghana Stock Exchange performance over 20 years, from 2000 to 2019. Ghana Stock Exchange Composite index was the dependent variable for the study with controlled variables of Interest rate, rate of Inflation, Exchange rate and Money Supply were analyzed in this study. The Johansen Multivariate Cointegration Method was conducted to test if there is a long-term relationship between the interest rate and the Ghana Stock Exchange Composite Index. According to the findings, with a coefficient of 14.63%, interest rates significantly impact the Ghana stock composite index. The inference is that a 1% increase in interest rates would result in a 14.63% drop in Ghana Stock Exchange Composite Index. Results of the study also indicated a long-run cointegration among interest rate and the Ghana stock composite index was a significant level of 5% with a p-value of 0.0025. According to the analysis, policymakers will benefit from this study because it will give them insight into developing and implementing effective fiscal and monetary policies to bolster the financial market.
Keywords: Consumer Price Index, Exchange Rate, Unit Root Test, Johansen Co-integration Test
Journal Name :
EPRA International Journal of Economic and Business Review(JEBR)

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Published on : 2021-04-19

Vol : 9
Issue : 4
Month : April
Year : 2021
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