IMPACT OF EQUITY MARKET PERFORMANCE ON ECONOMIC GROWTH: AN ANALYSIS OF THE RWANDA STOCK EXCHANGE
Abstract
This study investigates the relationship between equity market performance and economic growth, focusing on the Rwanda Stock Exchange (RSE) as a case study. As emerging markets gain prominence in the global financial landscape, understanding how equity markets influence economic development becomes crucial. This research analyzes the performance of the RSE and its impact on Rwanda's economic growth by examining historical data on stock market indices, trading volumes, and macroeconomic indicators.
Using econometric models, the study assesses how fluctuations in equity market performance, including stock prices and market capitalization, correlate with key economic growth metrics such as GDP growth, investment levels, and employment rates. The analysis reveals that positive equity market performance is generally associated with favorable economic growth outcomes, reflecting increased investor confidence and capital inflows. Conversely, periods of market downturns are found to correlate with slower economic growth, highlighting the sensitivity of Rwanda's economy to equity market volatility.
The findings suggest that a robust and stable equity market can play a significant role in promoting economic growth by facilitating investment and enhancing financial market efficiency. The study also identifies policy recommendations for improving market stability and attractiveness, such as enhancing market infrastructure, increasing transparency, and implementing regulatory reforms. By providing insights into the dynamics between equity markets and economic growth, this research contributes to the broader understanding of how financial markets can support sustainable economic development in emerging economies like Rwanda.
Keywords
Equity market performance, economic growth, Rwanda Stock ExchangeHow to Cite
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