Factors affecting the performance of capital markets in Uganda

Abstract

This study assessed the factors affecting the performance of capital markets in Uganda. The specific objectives were to investigate the effect of interest rate policy on the performance of capital markets in Uganda, to examine the effect of financial knowledge on the performance of the capital market in Uganda, and to assess the impact of market liquidity on the performance of capital markets in Uganda. The study was conducted at Kampala City and involved a sample size of 52 respondents drawn from Top Managers and the personnel from the Uganda Securities Exchange (USE), the Capital Market Authority (CMA), and Brokerage Firms, who were selected through random and purposive sampling techniques. The data were collected through a combination of techniques namely; questionnaires. The collected data were analyzed through the use of SPSS, discussed and presented through the use of figures, tables as well as text. The study reveals that there are challenges for the capital market development that remain unsolved since the establishment of the CMA and the USE, despite the prospects experienced to the market. Hence the study recommends for more reforms to our laws and policies governing the capital market business, demutualization of the USE, Stock Markets integration so as to make the market flexible hence rapid development of the market. The findings further revealed that market is illiquid as there are few trade able securities and few investors too. That major players in the business are the pension funds, which hold assets at certain ratio at marketable prices.