Economic Modelling of Capital Market and Investment Sustainability in Rwanda

Abstract

This research is focusing on economic modelling of capital markets and investment sustainability in Rwanda. In Rwanda the investment is very highly needed in order to uplift the level of the economy of the country. There are different reasons for instance the costs of transport due to the geographical situation. In this research, the focus is to test the significance of the capital markets on investment at market of Rwanda. The regression model will apply, but, first of all, the graphical presentation will be done all variables of the model; investment, turnover and market capitalization have the trend and intercept while number of shares has the intercept only. In addition, the test of stationarity will follow; whereby, investment and market capitalization are stable on the first difference while turnover and number of shares are stationary at level. These variables are cointegrated. In Error Correction Model there will take 33 months to recover in short. The long run relationship shows that, the model fits at 88%. The Impulse-Responses also determines how the shocks will affect one another. The capital market needs an important support to raise the investment in Rwanda. Because the findings illustrates its impact positivel