Stock Market Awareness And Participation: To What Extent Do The Ghanaian Elite Class Aware Of, And Take Advantage Of The Financial Market Instruments?

The key elements of an efficient market encompass information flow (private and public) and number of stock market participants. Limited stock market participation partly explains the low growth and expansion of the African stock markets. The Ghana Stock Exchange (GSE) is an organized financial market place where registered member companies offer and trade their securities. Being the first of its kind, this paper investigated the extent of awareness, knowledge of the investment products, and to a large extent, participation in the GSE. We made significant findings through both review of literature and electronic survey questionnaires. First, we found that Ghanaians who had formal education ranging from secondary education to graduate education have had reasonable knowledge and exposure to the existence and operations of the Ghana Stock Exchange. Whereas on average, 62% of participants indicated in the survey they’re aware (84%) of the existence of the Ghana Stock Exchange (GSE), its products (52%) and operations (50%) through formal education, social media or family relatives and friends, only 28% participate in the stock market. Ironically, what remains undiscovered by this paper are reasons other than education and awareness (cultural, community effect, geographical or proximity) that explain the low participation in the stock market by Ghanaians through stock ownership. Also, we found that proximity to publicly traded firms influence stock market involvement and stock ownership through community effect. The Ghanaian stock market experience low stock ownership and investor participation due to concentration of publicly traded firms in only the few major cities in the country. Findings further indicate that stock brokers in Ghana who serve as a bridge between existing and potential investors and the stock market (GSE) tend to concentrate only in the two major cities – Kumasi and Accra – offering disproportionate services to only those who have access to their services. The study further made a shocking finding which appeared to be inconsistent with existing studies; we did not find significant difference between groups who had business education including accounting economics and finance and those who did not have business education exposure. This finding is essentially at variance with existing reports that financial literacy has a positive correlation with stock market participation