The Determinants of Capital Market Development in Tanzania, The Case Study of Dar es Salaam Stock Exchange.

Msangi, Penford Hashim (2015) The Determinants of Capital Market Development in Tanzania, The Case Study of Dar es Salaam Stock Exchange. Masters thesis, The Open University Of Tanzania.

Preview

PDF Download (926kB) | Preview

Abstract

This study sought to determine the determinants of capital market development in Tanzania. The empirical study was conducted using time series data for the period 1998- 2012. This study adopted quantitative approach and employed secondary data of fifteen years, Pearson correlation test was used to evaluate the relationship between the variables. Furthermore, this study used multiple regression analysis by applying Ordinary Least Square (OLS) method. The macroeconomic variable data involved were stock market liquidity, investment, the banking sector development and foreign direct investment. For capital market development indicators, market capitalization, listed companies, value traded and turnover ratio were considered. The regression results demonstrate that investment, banking sector development and foreign direct investment are important determinants of capital market development in Tanzania. However, the study found out that there was no relationship between capital market development and stock market liquidity. The findings from Ordinary Least Square (OLS) indicated that the model is significant in a whole. The study recommends the following policies among others; the government should regulate and control financial sector in order to promote the capital market development. Policy maker should cut off restriction for the foreigner investors and to create strategies to increase the foreign direct investment and offer incentives. The study further recommends that the government needs to provide policies that retain reasonable interest rates and it should also provide more efforts in the infrastructures, especially electricity, telecommunication and roads across the regions in order to retain more investors.

Actions (login required)

View Item