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This research study provides an empirical analysis of the effect of stock market performance on
economic growth. In essence, the stock market is expected to foster economic growth as it
provides the channel for fund mobilization to establish and expand various investments. The
purpose of this research study was to evaluate the effect of stock market performance on
economic growth in Tanzania, a case of DSE. The researcher formulated four research
hypotheses which stated the effect of market capitalization, average stock prices, stock turnover
and intervening effect of inflation rate on economic growth. The study adopted a pure
quantitative approach using a multivariate regression model with a sample size of 120 units (the
DSE monthly performance reports for ten years, 2008-2017 as well as inflation rate and GDP
growth rate for the same period which were obtained from the BOT website), and the data were
analyzed using SPSS.
The findings of the study reveal that stock market performance has effect on economic growth
which is in line with the previous studies except that the effect is not as significant as the
literature stated in some countries.
The study concluded that there could be a large number of other factors influencing Tanzania’s
economic growth other than those included in the analysis of this study which are market
capitalization, average stock prices, stock turnover and inflation rate as intervening variable. The
study also recommended that future research studies could include other variables in the study
and the need for the DSE, and the government of Tanzania in general, to increase awareness
among the public on the role and importance of the DSE as a channel for mobilizing capital for
investment. |
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