FACTORS AFFECTING STOCK MARKET GROWTH: IN THE CASE OF ETHIOPIA STOCK EXCHANGE

Abstract

Stock market success in any country is a convincing point of reference in a general economic performance and is an integral part of the economy of any country. Free and open economic policies and advanced technology introduction, parties in the sector are realizing uncomplicated means of approach to stock markets around the world. The reality that stock market indices have become a directive of the health of the economy of a country indicates the significance of stock markets. In Ethiopia stock market growth is a potential major problem that may face the Ethiopia stock exchange, and it is notable that there is lack of a consensus of the effect of stock market exchange, on stock market growth. This study is carried out to investigate factors affecting stock market growth: in the case of Ethiopia stock exchange. The study adopted descriptive survey research in order to achieve its specific objectives. The research examined independent variables (regulatory framework, technology, corporate governance, and capital inflow) against dependent variable (stock market growth). The data for the study was collected using self-administered questionnaire from a sample of 181 respondents selected using proportional stratified simple random sampling techniques from the target population of share company managers, government officials, employers and shareholders in the selected private organization at different level, principal persons and respective staffs with 95% confidence level and an error of 0.05. The relationship proposed in the framework were tested using Pearson correlation, and the causal relations were analyzed using regression analysis. From the result of the analysis, it is concluded that there is the fact that independent variables (regulatory framework, technology, corporate governance, and capital flows) have a positive and significant influence on dependent variable which is used to determine factors affecting stock market growth: in the case of Ethiopia stock exchange, and the sector has influenced by independent variables significantly.