The Effect of Some Selected Macroeconomic and Financial Variables on Commercial Bank Deposits: Empirical Evidence from Ghana

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The Effect of Some Selected Macroeconomic and Financial Variables on Commercial Bank Deposits: Empirical Evidence from Ghana

Abstract

The main objective of the study is to investigate the effect of the selected macroeconomic and financial variables on commercial bank deposits in Ghana. It examines the long run and short run elasticities of deposit interest rate, inflation, policy rate, growth of money supply and stock price on commercial bank deposits by executing the Johansen-Juselius multivariate cointegration test and subsequent, the vector error correction model (VECM). The findings indicate a long run association between commercial bank deposit and the explanatory variables. Findings from the VEC analysis using the systems equation reveals that bank deposits reacts to inflationary shock as well as growth of money in the short run.

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