IMPACT OF CAPITAL MARKET ON ECONOMIC GROWTH OF RWANDA CASE STUDY: COMPANIES LISTED ON RWANDA STOCK EXCHANGE (2020-2022)

Abstract

The general objective of this study was to analyze the impact of capital market on the economic growth of Rwanda within listed companies in Rwanda. The study had three main objectives: To examine the effect of capital market securities on the economic development of Rwanda, to examine the impact of stock market policy on economic growth of Rwanda, and to determine the mediating effect of stock market policy between the relationship capital market securities and economic development of Rwanda. The study design incorporated descriptive and analytical techniques. With the help of Yamane's algorithm, a sample of 58 respondents from the target population of 133 people working for various companies listed on the RSE were randomly selected to receive a structured questionnaire. Version 20 of the Statistical Package for Social Sciences (SPSS) was used to input, manage, and analyze the gathered data. From the study findings imply that capital market securities accounted for 60.84% of the economic growth in EOC as represented by the R2. This means that other factors not studied in this research contribute 39.1% to the economic growth of RWANDA. The Analysis of Variance revealed that the F-calculated was 24.356 and was greater than the F-critical and the p-value was 0.002, which was less than the significance level (0.05). The study established an R-Square of 0.733 which indicates that 73.3% of variances in economic growth in EOC are caused by variances in Stock market policies. An F-statistics of 27.340 which was established as the ratio of Mean Square Regression to the Mean Square Residual, further showed that the model of the study was significant as evident by the significance level of 0.001< 0.05, demonstrating that changes in stock market policies such significantly causes changes in economic growth in RWANDA. The interaction between capital market securities and stock market policies was significant (β3=0.273,p=0.000), as indicated by a significant value less than .005. The results therefore shows that stock market policies moderate the relationship between capital market securities and economic growth.. On the basis of findings from chapter 4, the study concluded that there is positive and significant effect of capital market securities on the economic development of Rwanda. Therefore, based on the result showed from the test of hypotheses, all hypotheses were accepted at 5% level of significance. The report suggests that tax breaks be offered to stimulate and encourage both domestic and foreign direct investment in Rwanda. The regulatory organization, the CMA, should take the lead in adopting and disseminating norms and regulations to ensure the correct operation of financial markets and, in turn, draw in more investors to his market, according to the study's other recommendation.