Factors Influencing Investors Awareness in Nepalese Stock Market
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Department of Economics
Abstract
The commencement of the capital market has granted investment opportunities for
individuals and institutional investors in Nepal. The capital market acts as a
mechanism that creates investment alternatives for the saving or surplus units and
source of long term funds for individuals, firms and the government. Capital market
plays a vital role in the economic development by creating the employment
opportunities through capital formation and acting as the intermediaries between the
saving units and the deficit units. But, the mere existence of the capital market does
not guarantee the economic growth. This mechanism creates the micro-level saving
mobilization, an opportunity and challenges too. The financial literacy and awareness
level are the crucial elements for the healthy growth of the market.
The main purpose of the study is to find the level of awareness among the stock
investors in Nepalese capital market. The study also analyses the factors influencing
investor awareness. In this study 104 samples were taken from the whole
investors/clients. In order to conduct this study, descriptive research design has been
adopted. The source of information for this research was primary data collection from
the investors. The major source of the primary data was structured questionnaires
which were distributed and collected from the investors who invested in share market.
For the purpose of analysis of the data, the data collected from the survey were coded
for statistical analysis. SPSS tool was used to organize the data, determine significant
relationships and identify difference or similarities with & between different variables
under study.
The findings from Z test show that there is statistically significant relationship
between investor awareness, fundamental and technical analysis, education and
training programs, social learning and motives, evaluation of investment alternatives,
regulator’s rules and regulations and information dissemination. Pearson correlation
coefficient shows that investor awareness and the factors influencing it are positively
correlated.
It is concluded that the level of investor awareness is moderate i.e. mean = 3.72 in
Nepalese stock market. Most of the Nepalese investors use only fundamental analysis
v
for analyzing investment on stock. They analyze debt/equity, price/earnings, assets
and liabilities, dividends, cash flow, sales, earnings estimates, growth, etc. Majority of
them do not conduct technical analysis such as trend analysis, momentum analysis,
chart analysis, moving average etc due to lack of knowledge. Thus, trainings,
workshops & seminars regarding investments should be carried on a regular basis in
various parts of the country. During such programs, the investors should be educated
about technical aspects of investment, nature of risk and return, investor rights and
obligations, new financial products, benefits of investing etc. NEPSE has to ensure
that all companies share all relevant information on a timely basis so that the stock
price reflect their company’s status more accurately.