Influence of socio-economic factors on the participation of individual investors in Dar es Salaam stock exchange

Abstract

Individual participation in the emerging stock market, such as the Dar es Salaam Stock Exchange (DSE), is growing, although it covers only 2 per cent of the working population in Tanzania. This study examined socio-economic factors that explain individual participation decisions in DSE. Data were collected from 200 participants and 200 non-participants using a questionnaire. Quantitative data were analyzed using descriptive statistics and a binary logistic regression model, while qualitative data were analyzed using thematic analysis. Results indicated that individuals participate in different social and economic groups, which motivates them to invest. The BLR results indicated that social interaction, income, and internet technologies are the potential to influence individualsʹ decisions to participate in the stock market. Conclusively, social interactions, access to the internet and investment preference have a high likelihood of influencing individuals' investment decisions. These results are consistent with socioeconomic and cultural risk theories showing that the intermix of economic and social factors influence individuals' investment decisions. However, these theories do not include internet technologies. In this vein, the inclusion of these technologies in determining the influence of an individual's participation in the stock market is necessary. These results call for the government to strengthen supervision and quality monitoring of social group operations and management of funds. Furthermore, the study advocates DSE to use technology enablers such as the internet and social media to reach many individual investors.