Abstract:
Financial markets serve as the backbone of modern economies, playing a pivotal role in the allocation of capital, risk management, and wealth creation. The efficiency of these markets is essential for fostering economic growth, development and stability at both the national and global levels. RSE have been playing a very important role in the development of the Rwanda national financial system such as economic barometer, providing liquidity, capital, householder participation in the national economy growth and stability. The inflation (CPI), the Gross Domestic Product, the Money supply is one of the most important vectors that drive the economy and the research independent variables. This study had the main objective of determine the effect of the inflation on the Rwanda Stock Exchange investment, to fulfil this objective the study have analyzing the long run and short run relationship between the inflation and the Rwanda stock market participation; the result of our study has shown that there exist a long run and a short run relationship between them. By linking the specific objectives on this study such as the relationship between gross domestic product and the Rwanda stock market participation, the relationship between Money Supply and the stock market participation the study has finding a significant relationship between variables. To attain the purpose of this research, secondary data was entirely used and the research have used the annually data for 10 years. From 2013 to 2022. To get the result of our analysis, the study carried out test as Unit root test at level, Cointegration test, Residuals diagnostic, Stability test. The analysis of data has been done by using the Augmented Dickey fuller test to test the stationarity, long run relationship analysis, the short run relationship analysis and the error correction model. The result has shown that the inflation, the gross domestic product and the money supply have really a long run and a short run relationship with the market participation. The study recommended the Rwanda stock exchange to implement a trading model which allow more participants in the market such as the bot trading software (AI). Keywords: inflation, consumer price index, gross domestic product, stock market exchange, money supply,
