Determinants of investors’ participation on the Rwanda stock exchange

Abstract

The stock exchange contributes significantly to national economic development through stock investments. Thus, more investor participation is critical in achieving this economic outcome. The primary goal of this research is to investigate the factors influencing investor involvement on the Rwanda Stock Exchange (RSE). The study is anchored on Tobin's separation theorem, financial socialization theory, and social network theory. The survey designed research has a population of 25,647 investors from where sample of 219 respondents was drawn from RSE investors. The collected data were analysed using Profile of the Respondents (demographics), correlation and regression analysis on SPSS. This study's respondents were identified via purposive sampling, and responses were collected using a survey questionnaire. Data were collected through a structured questionnaire for investors, semi-directed interviews with brokers, and a documentary review. According to the findings, financial literacy, social network and government support has a significant joint positive effect on investors’ participation on the RSE. The study concludes that enhancing investor participation in the RSE depends significantly on a combination of individual knowledge, social influence, and institutional support. The study recommends that; in order to increase participation in the RSE, the Rwandan government broadens its financial literacy initiatives, implement investor-friendly laws, and promote the sharing of information on social media. The current article is unique in that it integrates personal and non-personal traits as important predictors of investor engagement in emerging nations' stock exchanges.