Determinants of stock market participation by individuals: The study of Dar-es-Salaam Stock Exchange

Abstract

The importance of well-functioning stock markets on economic development cannot be overemphasized. Since the early 1980’s, many African countries embarked on the establishment of these markets. The citizen’s participation however, is still very minimal. The main objective of this study was to determine the factors that influence stock market participation in Tanzania. Specifically, the aim was to examine the influence of social, economic, and financial literacy factors. The study applied a survey approach. Both purposive and incidental data collection techniques were employed to administer the questionnaires. A total of 173 respondents completed the instrument. The findings revealed that income, occupation, education and age were significant explanations of the determinants of stock market participation in Tanzania. On the other hand financial literacy and gender were found to be insignificant. The analysis of the findings was based on cross-tabulation, chi square and binary correlation under SPSS version 20 package. This study recommends that DSE needs to enhance market participation, by providing education and training to students and the public so as to increase awareness on stock issues in order to attract more participants to buy and sell shares of companies listed at the Dar-es-Salaam Stock Exchange.