The Dynamic Linkage between Money Market, Capital Market and Economic Growth in Ghana: New Lessons Relearned

Isaac A. Ogbuji 1 , Ekundayo P. Mesagan 2 , and Yasiru O. Alimi 3
  • 1 Department of Finance, University of Lagos, Nigeria
  • 2 School of Management and Social Sciences, Pan Atlantic University, Lekki, Nigeria
  • 3 Department of Economics, Lead City University, Nigeria


This study is a comparative analysis of the effects of money and capital markets on the Ghanaian economy covering the period from 1991 to 2017 using the dynamic Auto Regressive Distributed Lag (ARDL) framework. Empirical results confirmed the existence of a unique and stable long-run relationship between the money market, capital market and economic growth. In respect of money market indicators, findings confirmed that monetary policy and treasury bills rate have had negative but significant impact on growth in the short- and long-run respectively. More so, total liquidity negatively and significantly influenced the Ghana-ian economy both in the short- and in the long run. Both market capitalisation and total value of stock traded, as proxies of capital market, had positive and significant effects on short-run growth, while both indicators as well as stock market turnover negatively and insignificantly a ected long-run growth. This means that capital market exerts a short-run impact on the country’s economy, while money market exerts both short- and long-run impacts. The lesson relearned is that the money market propels the Ghanaian economy better than the capital market.

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