Zimbabwe stock exchange trading automation and its impact on the development of the local capital market: A Zimbabwean perspective

Abstract

This study investigated the possible impact that trading automation of Zimbabwe Stock Exchange (ZSE) could have on the development of the local capital market from an ex-ante perspective. An assessment of the current level of development of the local capital market was looked at with a view of making recommendations for further improvement from the current levels. In measuring capital market development, four parameters namely, liquidity, volume and value traded, price discovery process and regulation of the market, were used as proxies for capital market development. In determining the current level of capital market development in Zimbabwe, a Capital Market Diagnostic Model was used. A survey was used to collect data from the capital market stakeholders through a structured questionnaire. The results indicated that trading automation has got statistical significant relationships with local market liquidity, volumes and value traded, price discovery process and local market regulation. The study concluded that trading automation of ZSE will result in capital market development, improvement in liquidity, volume and value traded, price discovery process as well as regulation of the local market.