Determinants of Stock Market Investment Intentions in Emerging Economies: The Case of Ethiopia
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Date
2026-05-22
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Addis Ababa University
Abstract
Abstract
The stock market is believed to be one of the main drivers of economic development across the world. All developed country possesses a stock exchange of their own, which enables corporations to raise capital for expansion besides taking business loans and individuals ownership and wealth creation. This will in turn contribute to the development of industrialization and innovation. Therefore, emerging economies have also been jumping onboard and establishing their stock exchanges to ensure economic development. To ensure that intended outcome is attained, stock exchanges and capital market authorities as well as the wider public needs to drive the stock exchange by having active, ethical and transparent participation. This study examined the cognitive and behavioral antecedents of retail stock market investment intentions in this emerging frontier market. The approach is quantitative, deductive, standardized and the study is based on potential investors of Addis Ababa. Multiple linear regression analysis was performed to assess the effect of four core independent variables: Financial Literacy, Perceived Trustfulness, Alternative Investment Preference, and Information Availability and Awareness. The study is descriptive, having a sample size of 400 and utilized random sampling technique. The hypothesis testing provided results that confirm and contradict previous literatures in behavioural finance. The results saw preference over alternative investment provided highest positive effect on Investment intentions in the stock market, followed by Information availability and awareness, and lastly, financial literacy showed a positively significant effect towards stock market investment intentions. However, perceived trust and governance did not have any significant impact towards stock market investment intentions. The research conclusions provide vital blueprint for policy makers, researchers and practitioners.to successfully mobilize retail capital, the study proposes that the ESX and the Ethiopian Capital Market Authority (ECMA) should put more emphasis on structural accessibility, open-access, easily accessible and informative market data, financial literacy education and the integration of alternative asset frameworks instead of mainly focusing on conventional trust-building campaigns.
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Stock Exchange, Capital, Investor, Economic Development, ESX, ECMA