Information efficiency of the Dar es Salaam stock exchange (DSE): weak form evidence

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University of Dar es Salaam
One of the crucial aspect in economic reforms policies adopted by Tanzania since 1990s is the shift from the centrally-planned economy to an economy that is governed by market forces of supply and demand. The state is determined to remain a regulator and monitor of the economy whereas the public is left to enter the economy playground. Establishment of capital markets was taken towards achieving this end. The primary objective of the study is to assess the extent to which prices of securities traded in the Dar es Salaam Stock Exchange impound the historical patterns of past security returns. In examining the efficiency of the capital markets the study was conducted to obtain empirical evidence which could address such queries as: Do successive security prices and returns depend on each other such that one can predict futures prices? Do investors (potential and existing) use historical patterns of security prices and returns to make investment decisions? And so on. In order to address the empirical queries mentioned above Daily Trading Data Series for all products in the market were collected. The series covered the period April 1998 to June 2002. The study used Correlation analysis, Runs tests, Chi-square tests (x2)and Descriptive analysis to analyse daily stock relations data over the period April 1998-June 2002 in the analyses. Results of the analysis revealed that the Dar es Salaam Stock Exchange appears to be efficient in the weak form meaning that stock market returns are not predictable. In conclusion the study provides evidence on the weak form efficiency of the capital markets specifically the Dar es Salaam Stock Exchange (DSE) that is, whether security prices in the Dar es Salaam Stock market adjust to historical price information.
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Tanzania, Economic reform, Investment, Dar es Salaam, Stock exchange, Price regulation, Security
Mwasanguti, E. A. (2002) Information efficiency of the Dar es Salaam stock exchange (DSE): weak form evidence, Masters dissertation, University of Dar es Salaam. Available at (