Manu, Freda2017-11-282017-11-282017-05http://hdl.handle.net/20.500.11988/322Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, May 2017Stock markets in developing countries have been likened to “casinos” as a result of the general perception that they do not contribute to economic growth. Very few studies have tried to specifically examine the situation in Ghana with varying results. Most studies employing OLS have found a positive relationship between the variables whiles those that have employed ADRL or VEC, have often found a negative stock market and growth nexus in Ghana. Research, however, shows that, OLS regression analysis involving economic and financial data could suffer spurious regression due to presence of unit root in most of these variables. Therefore, to examine the effect of stock market performance on economic growth in Ghana, the study employed VECM and Granger causality test, using market capitalisation ratio as stock market indicator, and GDP as economic growth indicator. Results from the VECM regression analysis showed that, the Stock Market contributes positively to economic growth only in the short-run. In the long-run, the Exchange does not affect economic growth in Ghana. The Granger causality test, on the other hand, revealed a unidirectional causal link between market capitalisation ratio and GDP, running from development in the size of the Stock Market to economic growth. The study also found the service sector to be the only sector benefiting from the Exchange’s performance with agriculture and industry being unaffected.en-USGhana Stock Exchangeeconomic growthstock marketGross Domestic Product (GDP)Thesis