Ghana Stock Market - Dissertation Example

This paper addresses the issues involved in making the stock market work for the improvement of a borderline national economy that is venturing into this financial activity for the first time. For a more comprehensive undertaking, we will start by assessing the benefits that can be derived from the establishment of a stock market. The idea is to ascertain how the stock market contributes to the improved allocation of capital to industry, what is the relationship between stock market development and economic growth, and what factors determine stock market development.

More important, the study aims to discover the surefire ways by which poor countries that have yet to attain financial depth and expertise can make their newly established stock exchanges more functional and useful. From the general perspective, the paper shifts its focus on the dynamics of a particular stock market, which is the young securities and equity market of Ghana. Established only 10 years ago, the Ghana stock market exhibits the inefficiencies that may be described as its growing pains.

The literature suggests that a country’s overall economic climate is the biggest influencing factor on stock market development, which means that Ghana faces formidable odds because of its low level of economic growth. This shows in the lackluster performance of the stock market as exemplified by the low levels of both individual and institutional investments. Latest data place individual and institutional investments at a miserable $5,000 and $20,000, respectively. This reflects in the relatively tiny client base of the market and the minuscule number of listed companies on the exchange.

1.3. Research Questions The paper will attempt to address the following set of questions: 1. What benefits can a developing country gained from the stock market that operates efficiently 2. What is the relationship between stock market development and economic growth