Trade financing and economic growth nexus in Ghana.

Abstract

This is a research work that have been conducted to ascertain the relationship between trade finance and economic growth in Ghana. Data was taken from the worlds bank world integrated trade solution. The study has an introduction that is made up of the evolution of money and various trade finance instruments, the geographical information and economic history of Ghana. The study captures three objectives which includes ascertaining the value of Ghana’s trade balance and gross domestic product. Examining the relationship between Ghana’s trade finance and economic growth. Lastly, exploring the impact of Ghana’s trade finance on its economy. Theories of trade finance and it’s linkage to economic growth are being reviewed in the study. A number of empirical studies was also scrutinized to give a clear reason for this studies, conceptual framework has been organised to give a clear picture of relationships between variables of study in the work. Quantitative method of study and correlation study approach has been used in the research. The data collected from the world banks world integrated trade solution was fed into stata software version 14. After testing for linearity, autocorrelation, heteroscedasticity, normality, stationarity and multicollinearity. An ordinary least square regression was run by the software and it was realized that trade finance has a negative relationship with economic growth after several theorist and empirical studies proved otherwise in the western world. The paper concluded that high demand for foreign exchanged was recorded in these periods causing major foreign exchange rates to rise and fluctuate pushing up prices of imports and since the country imports more consumables, the general price of consumables rise to cause inflation. The study recommended that government and other stakeholders should invest in human capital, research and innovation, provide subventions and infrastructure to promote exportation and institutional framework to support high productivity and exportation.Further studies is recommended for institutional theory of trade finance and growth in Ghana