Factors affecting Capital Market Development adaptation in Tanzania: A Case Study of Dar es Salaam Stock Exchange (DSE)

Bugalama, John (2013) Factors affecting Capital Market Development adaptation in Tanzania: A Case Study of Dar es Salaam Stock Exchange (DSE). Masters thesis, The Open University of Tanzania.

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Abstract

Capital markets and specifically DSE aim to achieve broad bases of the share ownership and provision of investment culture in the country. Although some efforts have been put to inculcate investment culture in the country the pace is still low which is associated with low public awareness. The main objective of the study was to examine the factors that influence capital market development adaptation in Tanzania. Survey research design was used in the methodology. A sample size of 35 respondents was involved. Data collected was analyzed by SPSS computer software. The findings showed that; (80%) of respondents stated that the factors that influence capital market development adaptation included; geography (location of regional markets), risk of market imperfections and illiquidity which are poorly defined regarding the legal rights of investors. Moreover, (82%) of respondents stated that investor base which is still small affected capital market development; while (82%) of respondents highlighted the country risk from the risk of macro- economic performance and policy errors (85%) influenced capital market development adaptation. The study concludes that, for capital markets to flourish they require effective institutional, regulatory and legal infrastructure to specify and enforce disclosure standards for all companies issuing securities. However, stakeholders should be encouraged to merge with other strategic partners and investing on areas that are more profitable while DSE providing mass education on capital markets through radios, television and internet facilities and enhancing fiscal incentives to investors (both domestic and foreign) in order to have adequate products and listed companies.

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