Osei, K.Kumankuma, S.Ofosu-Mensah Ababio, J.University of Ghana, College of Humanities, Business School, Department of Banking and Finance2015-11-232017-10-142015-11-232017-10-142010-06http://197.255.68.203/handle/123456789/7209Thesis(M.Phil)-University of Ghana, 2010This study has investigated empirically the effect o f Financing Cost on Private Investment in Ghana, over the period 1970 - 2008. To this end, the variables used were classified as Cost factors and Non Cost factors o f private investment, using the latter as control variables. The private investment function derived is a variant o f the flexible accelerator principle designed to account for the objective o f the study. It employed the Augmented D ickey-Fuller (ADF) test to address the problem o f unit root faced in time series analysis. The long run estimate o f the private investment function for Ghana was estimated using the Johansen co-integration technique. The Error Correction model was used to determine the short-run dynamics o f the variables used in the model. The study found that all the cost factors (interest rate, inflation rate, exchange rate and budget deficit) had negative and statistically significant impact on private investment in the long run. On the other hand, in the long run. the non cost factors (credit to the private sector, real GDP and public investment) impacted positively on private investment but external debt had adverse effect. The results also found that with the exception o f the stock market variable, all the variables used co-integrated with private investment. The study further revealed that not all the variables used were significant in the long run, since variables such as public investment and external debt had the expected signs but were not significant. This study provided direct evidence that high cost o f financing is associated with low private sector participation in investment activities in Ghana. Accordingly, the study recommended among others that long term policies should be directed towards cost control and macroeconomic stabilization in order to boost private investment in Ghana.xi, 124p.enThesisUniversity of Ghana