An investigation into the factors determining the participation of individuals on the stock market: Evidence from individual investors in Zimbabwe

Abstract

The purpose of this study is to identify the factors that determine participation on the stock market by individual investors and also to establish which of the identified determinants has the strongest influence on individual client’s decision to participate or not to participate on the stock market. It has been established that participation of individuals investors in Zimbabwe is terminally low.A hypothesis was therefore developed and literature was reviewed to find some of the factors revealed by various authors .Through stratified sampling, a survey was used to infer from the authorities to solicit their understandings and opinions on the degree to which the identified factors can be determinants of participation of individuals on the stock market. Findings were coded and loaded into SPSS to analyze the results. A synthesis from the Chi square test and regression showed that liquidity constraints, life satisfaction, perceptions and awareness were statistically significant to explain reasons why some individual participate on the stock market and why some individuals shy away from participating. With the findings in hand, the paper went on to provide policy recommendations and managerial implications to address this problem of lack of participation by individual investors on the stock market. This paper can be of usefulness to stock market participants in augmenting their brokerage streams and in lubricating the financial systems through savings by household in stocks and equities.