The application of the concept of Nudging on the stock market and its effect on Investor participation: Evidence from Uganda

Abstract

The purpose of this study is to examine the application of the concept of nudging on the stock market and its effect on Investor participation, using evidence from the Uganda Securities Exchange (USE). The study used a quantitative, cross-sectional design with structured self-administered questionnaires. Data was obtained from 261 investors on the USE following a simple random sampling
approach. The data was analyzed using the Statistical Package for the Social Sciences (SPSS) and Analysis of Moment Structures (AMOS). Findings from the Exploratory (EFA) and Confirmatory Factor Analysis (CFA) revealed the best measures for both nudging and investor participation and established a significant positive correlation between nudging and Investor participation. The multiple regression analysis showed that nudging has a 30.1% significant impact on investor participation. The study contributes to the literature by developing items that measure the concept of nudging on the stock market, as developed from the exploratory and confirmatory factor analysis; these can be used by academics for future studies in the same area. The research informs policy regarding investor participation in the stock market because it brings to light the importance of applying the concept of nudging in improving Investor participation on the stock market.

Keywords: Nudging, Stock market