African Finance Journal - Volume 9, Issue 2, January 2007

This study empirically re-examines the weak form efficient markets hypothesis of the Ghana Stock Market using a new robust non-parametric variance-ratios test in addition to its parametric alternative. The main finding is that stock returns are conclusively not efficient in the weak form, neither from the perspective of the strict random walk nor in the relaxed martingale difference sequence sense. Unlike previous evidence, our finding is robust to thin-trading, sub-sample periods as well as the choice of dataset. Consistent with prior studies, the results of the parametric variance-ratios test are ambiguous. By contrast, its non-parametric alternative provides conclusive results.

Theory suggests that financial liberalisation, through increasing investment as well as the average productivity of capital, stimulates economic growth. Since bank-based financial deepening is often problematic due to adverse selection and moral hazard effects, the establishment and expansion of capital markets has been advocated. This study examines the effect stock market expansion has had for South Africa's economic development. A statistically significant negative relationship between stock market development and economic growth is found. The data suggests that the presence of thin trading prevents the theorized benefits of market development from accruing to the economy.

This study examines the key determinants of domestic savings in South Africa - using the cointegration based error-correction model. The study was motivated by the current low and declining saving rate in South Africa. The empirical results of this study, which cover the period 1968-2004, indicate that savings in South Africa are largely determined by the growth rate of real GDP, foreign savings, real deposit rate, government expenditure and terms of trade. Specifically, the study finds gross domestic savings to be positively related to the growth rate of real GDP, according to the life-cycle hypothesis. The study also finds that higher government expenditure is associated with lower domestic savings in South Africa. An improvement in the terms of trade tends to increase the saving rate in South Africa, while foreign savings seem to supplement rather than substitute domestic savings. An increase in real deposit rate also tends to encourage households to increase their savings in South Africa, in accordance with the McKinnon-Shaw hypothesis. Although the coefficient of inflation rate in the savings function is positive as expected, it failed to reach the traditional level of significance hypothesised in this study.

This article reports the findings of an empirical study documenting the extent of recognition, nature, content and perception of corporate social responsibility (CSR) by firms quoted on the Ghana Stock Exchange (GSE). The study derives its justification from the explosion in attention to CSR world wide in recent times. Although several studies have examined firm CSR actions in African contexts, none have studied CSR amongst quoted companies. The study's key findings were that a majority of the companies on the GSE subscribe more to the contemporary notion of CSR; their perceptions are strategic, moral, and ethical, as well as economic.