Portfolio Diversification and Capital Accumulation of Rwanda Stock Exchange of Listed Financial Companies: A Case of Selected Financial Companies Listed on Rwanda Stock Exchange
DOI:
https://doi.org/10.53819/81018102t2020Abstract
The fluctuation in stock markets disturbs the genuine investors and they build the mind of that it is not there for the new investors to be more creative due to price fluctuation. Despite the encouragement of investors in Rwanda, the problem existing is that the capital market is no longer growing at the pace expected and there are still few listed financial institutions in stock exchange and this slow the capital accumulation of stock exchange among listed financial institutions. The purpose of this study was to assess effects of Portfolio diversification on capital accumulation of Rwanda stock exchange of listed financial companies and to assess the role of market efficiency on capital accumulation of Rwanda stock exchange of listed companies. The study used three theories such as Model portfolio theory, risk aversion theory and Markowtz portfolio theory. The study used a descriptive research design with two mixed methods such as qualitative and quantitative. A descriptive statistic such as mean, standard deviation was determined while inferential statistics such as regression analysis and correlation analysis established. Therefore, data were analyzed through SPSS version 21 and the presentation was done using frequency tables, pie charts and bar charts. Research findings showed that the relationship between the study variables is significant with p-value 0.000 < 0.05). Therefore, the p-value for portfolio diversification is 0. 025. All these components are statistical significant since p=values <0.05. Based on the problems arising at capital market in that the capital invested in stock exchange market is raised on market situation and in fact that an increase in capital in almost firms do not stimulate enough capital accumulation for listed financial companies, researcher advice the management of I&M Bank Rwanda and Bank of Kigali to apply capital price model to achieve capital accumulation in Rwanda stock exchange operations. There is need to implement strategies regulating and encouraging investment decision in stock exchange operations
Keywords: Portfolio Diversification, Capital Accumulation, Stock Exchange Listed Financial Companies
References
Aboard, J. (2015 ). The effect of capital structure on stock exchange: Empirical analysis of listed firms in Ghana. Ghana: Ghana.
Afego, P. (2015). Market Efficiency in Developing African Stock Markets: What Do We Know? The Journal of Developing Areas, 49(1), 243–266.
https://doi.org/10.1353/jda.2015.0022 Agyei-Ampomah, S. (2013). Stock market integration in Africa Managerial Finance,. Ghana: Ghana.
Alquraan, & Shorafa, A. (2016). Do Behavioral Finance Factors Influence Stock Investment Decisions of Individual Investors? (Evidence from Saudi Stock Market). . American International Journal of Contemporary Research, 6(3), 159–169.
Apergis, N. and Eleftheriou, S. (2002). Interest rate, inflation, and stock prices: the case of Athens Stock Exchange. Journal of Policy Modeling 24, 231-236. https://doi.org/10.1016/S0161-8938(02)00105-9
Balbhimrao, S., & Kanahalli, B. M. . (2012). Performance Evaluation of Kisor P/E Investing. Indian Streams Research Journal, 1 (XII), , 1-4. https://doi.org/10.21095/ajmr/2011/v4/i2/88301
Bitar, A. (2012). Decomposition of Earnings to Price Effect. International Journal of Economics and Finance, 4 (1), 229-234. https://doi.org/10.5539/ijef.v4n1p229
Chinwuba, O. & Amos, A . (2011). Stimulating Economic Development through the capital market: the Nigerian experience. JORIND 9(2). international journal of management, 24-67.
Galanidis, I. (2016). The effect of Behavioral Finance on Capital Markets . The case of PIIGS: Portugal , Italy.
Khan, M. (2012). Non-standardized form of CAPM and stock returns . International Journal of Business and Social Science, Vol. 3, 2, 193–201.
Li, Z. (2012 ). On the Capital accumulation Effects of Equity Market Liberalization. Journal of Economic Development,37(2), 59. https://doi.org/10.35866/caujed.2012.37.2.003
Milionis, A. (2011). A conditional CAPM: implications for systematic risk estimation. The Journal of Risk Finance, 12, 4, 306–314. https://doi.org/10.1108/15265941111158488
Naser, K. & Nuseibeh, R.(2003). User’s perception of corporate reporting: evidence from Saudi Arabia. Journal of British Accounting Review, 35(2),129-153. https://doi.org/10.1016/S0890-8389(03)00015-5
Raza, S. and Qazi, F. (2011). Validity of capital asset pricing model in Pakistan: evidence from
Karachi Stock Exchange . African Journal of Business Management, 5, 32, , 12598–12605. https://doi.org/10.5897/AJBM11.2105
Schindler, M. (2007). Rumors in financial markets:. USA: John Wiley & Sons, 413.
Shania, T. & Ayse, Y. (2011 ). Information Content of Dvidend Announcements: An Investigation of The Indian Stock Market. . InternResearch Journal, 10 (5),, 49-57. https://doi.org/10.19030/iber.v10i5.4230
Waweru, N, & Uliana, E. (2008). The effects of behavioral factors in investment decision making: a survey of institutional investors operating at the Nairobi Stock Exchange. International Journal of Business and Emerging Markets, 1(1): 24-41. https://doi.org/10.1504/IJBEM.2008.019243
