Predictors of individual participation in capital markets in Zambia

Abstract

This study investigates the predictors of individual investor participation in the Zambian capital markets. Despite the critical role of capital markets in fostering national economic development and wealth accumulation, retail investor participation in Zambia remains notably low compared to regional counterparts. Adopting a positivist research paradigm and a deductive, quantitative approach, this cross-sectional study surveyed a diverse sample of 304 Zambian individuals to assess how age, income, risk aversion, and the preference for hassle-free investments affect market engagement. The findings, supported by hierarchical multiple regression analysis (R ²  = 10.46%), indicate that higher income levels (B = 0.093, p = 0.066) and risk aversion (B = 0.108, p = 0.052) are significantly and positively associated with greater capital market participation. In contrast, increasing age (B = −0.013, p = 0.020) and a strong preference for hassle-free investment options (B = −0.096, p = 0.044) are negatively correlated with active engagement in the market. Based on these insights, the study recommends that market regulators, such as the Securities and Exchange Commission (SEC) of Zambia, alongside financial institutions, prioritize targeted financial education, implement demographic-specific outreach strategies, and streamline investment platforms to reduce barriers to entry. Addressing these elements is important for cultivating a more inclusive investment culture and driving broader economic growth in Zambia.