Cost of Capital and Economic Development: The Case of Ghana's Liberalized Capital Market
Benjamin K.B. Thompson

The development of the private sector is an important driver of economic growth in Ghana. It is therefore imperative that Small and Medium Enterprises (SMEs) have access to affordable capital. The study analyzed the effects of Foreign Direct Investments, Savings, Stocks Traded, Inflation and Remittances as independent variables on Cost of Capital, which is used as the dependent variable. The study used empirical time series data to test the effect of the independent variables on the dependent variable. The results show that Remittance has a significant and inverse effect on Cost of Capital while inflation has a significant but direct effect on Cost of Capital. It is imperative that policy makers give due consideration to remittance when formulating policies to curb the volatile nature of Cost of Capital in the country. Conversely it is imperative that inflation be contained in order to bolster the growth of SMEs in the country.

Full Text: PDF     DOI: 10.15640/jfbm.v3n1a1