The Role of Stock Market on Economic Development of Rwanda; A Case Study of Rwanda Stock Exchange

In Rwanda there is need to provide funds to start new businesses and to expand existing businesses and industries. The stock market provides companies and the government with an avenue to raise Stock through the sale of shares and bonds to the public. The stock markets bring together those with surplus funds and those with a deficit and facilitate the exchange of the monies. This has however not gotten to its optimal level due to the following challenges facing the Rwanda stock market. First, in RSE there are a limited number of companies listed in the Rwanda Stock Exchange, the investors in Rwanda have limited investment portfolio and another challenge is the limited access to long term securities. The general objective of this study examined the role of stock market on economic development of Rwanda. This study was adopted descriptive research design. The target population of this study is 12 employees of Rwanda Stock Exchange. The researcher was used an open ended questionnaire as data collection. This means that that researcher collected the data through questionnaire. Researcher was used primary data. The Rwanda economic development has an overall correlation with stock market products of 0.776 which is strong and positive. This means that approximately 77.6 % variations of economic development of Rwanda are explained by the stock market products at 5 % level of significance. These indicate good fit of the regression equation used. Results indicate that Treasury bond is the most significant in explaining the economic development of Rwanda with a significance of 0.000 which is less that a p-value of 0.05 and beta value is 0.872. Pearson correlation coefficient, (r=0.864) shows that there is a positive and high correlation relationship between stock market and economic development where the P-value (0.000less than0.05). Stock markets also help finance the public sector borrowing requirement while reducing fiscal pressure of debt redemption if maturities of securities are lengthened. To increase the stock market products in the market should ensure an increase in economic growth.