Gross Domestic Product, Inflation, and Stock Market Performance. Does Board Financial Expertise Matter? Insights from Tanzania

Abstract

This study examines the effects of Gross Domestic Product (GDP) and inflation on stock market performance, as well as the moderating role of the financial expertise of the board of directors in Tanzania. The study employed system- and resource-based view theories and used a sample size comprising 384 observations from companies listed on the Dar es Salaam Stock Exchange (DSE). Data covering the period from 2007 to 2022 were drawn from the audited financial statements of the listed entities, the Dar es Salaam Stock Exchange (DSE), and the National Bureau of Statistics (NBS). The Random Effects Model was employed, and the Augmented Mean Group (AMG) model was used for the robustness tests. The results indicate that GDP negatively affects stock market performance across all models. On the contrary, inflation has a strong positive effect on stock market performance in all models. Financial expertise has a positive and significant moderating effect on the connection between GDP and stock market performance, but not on the link between inflation and stock market performance. The findings of this study have managerial and policy implications.