AN ANALYSIS OF THE EFFECTS OF INTEREST RATE AND EXCHANGE RATE CHANGES ON STOCK MARKET RETURNS: EMPIRICAL EVIDENCE OF GHANA STOCK EXCHANGE

The study determines the effects of some macroeconomic factors that influence stock prices in Ghana, establish their relationship with stock prices and possibly use them to predict the likely changes in stock prices as a result of changes in these macroeconomic variables. The famous cointegration methodology is applied on monthly data of Ghana Stock Exchange All-share Index and the respective macroeconomic variables from January 2000 through December 2010 to determine the extent to which these macroeconomic variables influence the stock market returns. The study establishes that a long-run equilibrium and causal relationship exists between the dependent variable; GSE All-share index and the two independent variables under consideration namely, interest rate and exchange rate. It was also determined that in the short-run, effects of Interest rate and exchange rate volatility on Ghana Stock Exchange are nearly imaginary.

TABLE OF CONTENT

Title page- – – – – – – – – i
Approval page – – – – – – – -ii
Dedication – – – – – – – – -iii
Acknowledgement – – – – – – – -iv
Abstract – – – – – – – – – -v
Table of content – – – – – – – -vi

CHAPTER ONE
INTRODUCTION – – – – – – – -1
1.0 Background of the study – – – – -1
1.1 Statement of the problem – – – – -5
1.2 Purpose of the study – – – – – -6
1.3 Significance of the study – – – – -8
1.4 Research questions – – – – – -9
1.5 Scope of the study – – – – – – -10

CHAPTER TWO

LITERATURE REVIEW – – – – – – -11

CHAPTER THREE

Research methodology – – – – – – -39
Design of study – – – – – – – -40

CHAPTER FOUR

Presentation, analysis and interpretation of data – -48

CHAPTER FIVE

Summary of findings – – – – – – -60
Conclusion – – – – – – – – -61
Recommendations – – – – – – – -62
Suggestions for further research – – – – -64
References – – – – – – – – -65
Appendix I – – – – — – – – -68
Questionnaire. – – – – – – – -69