International Journal of Accounting, Finance and Risk Management 2019; 4(3): 105-101 http://www.sciencepublishinggroup.com/j/ijafrm doi: 10.11648/j.ijafrm.20190403.13 ISSN: 2578-9368 (Print); ISSN: 2578-9376 (Online) Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda Mbonigaba Celestin Business and Development Studies, Kibogora Polytechnic, Nyamasheke, Rwanda Email address: To cite this article: Mbonigaba Celestin. Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda. International Journal of Accounting, Finance and Risk Management. Vol. 4, No. 3, 2019, pp. 95-101. doi: 10.11648/j.ijafrm.20190403.13 Received: July 13, 2019; Accepted: August 5, 2019; Published: August 29, 2019 Abstract: The main objectives of this study were to examine the link between Capital Markets and the Financial Performance of Commercial Bank. The study was guided by three objectives such as: To examine the effect of equity market on the financial performance, to assess the effect of bond market on the financial performance, to establish the effect of securitized products on the financial performance of Bank of Kigali. The study adopted quantitative approach to collect data from 32 respondents’ employees of BK by using purposive sampling technique. Data collected was analyzed using SPSS, and the instruments of data collection were questionnaire, interview, and documentary techniques. The results show that perceptions of respondents about effect of bond market on the financial performance of Bank of Kigali Rwanda show that more than 84.4% of respondents confirmed that Size of Equity market affects market capitalization for generating net profit margin for BK; and 84.4% that size dimension of equity market reflects turnover ratio of BK. The R-Square was.759 while ANOVA shows the Sum of Squares of 7.875. The results on the effect of bond market on the financial performance of Bank of Kigali confirmed by 84.4% of respondents who said that Bond market of BK helps to increase its interest income; and 78.1% of respondents confirmed that accessibility of Bond market facilitates an increase of capital gain to BK in Rwanda. R-Square was.610 and ANOVA table shows that Sum of Squares of 7.875. The effect of securitized products on the financial performance of Bank of Kigali confirmed by more than 84.4% who said that commercial mortgages offered by BK increases the internal return of this commercial bank; 78.1% of respondents participated in the study confirmed credit card receivables facilities BK to increase income from borrowers of this bank; and 68.8% agreed that the Auto loans and student loans of BK increase the net profit margin. R-Square was 743 and its adjusted R-Square was.638. ANOVA table shows that Sum of Squares was 7.875 combining the regression of 5.850; and residual of 2.025. Mean Square was.650 for regression while.092 was on the side of residual in the Mean Square. As conclusion, based to the findings, there is significant positive effect of Capital Market son the financial performance of Bank of Kigali in Rwanda. Keywords: Capital Market, Financial Performance, Commercial Banks 1. Introduction This study is based on locally owned public commercial public bank in Bank. The researcher selected this sample due to the fact that there are only locally owned private commercial banks in Rwanda. In addition to that it is the largest private owned commercial banks in Rwanda. The study is carried in the financial sector especially in Bank of Kigali Rwanda limited [9]. The financial sector plays an essential role in providing and channeling financing for investment. Beyond providing short-term finance for businesses' day-to-day operations and other temporary cash requirements, financial institutions, Capital Markets and institutional investors are also sources of long-term finance that is finance which is available for an extended period of time [11]. The importance of long-term finance lies in its pivotal role in satisfying long-term physical investment needs across all sectors in the economy and specifically in key drivers of growth, competitiveness and employment such as the infrastructure, real estate, R&D and new ventures [2]. According to WB, Banking institutions play an important role in the economic life of any country with the result that continued strength, stability and soundness of the entire banking system is a matter of public concern. Banking institutions act as the