Effect of financial literacy on stock market participation in Kathmandu valley

Abstract

This study aimed to examine the effect of financial literacy on stock market participation in the Kathmandu Valley. The study used a survey research technique to accumulate data from selected respondents by asking participants about their beliefs, attitudes, and behaviors about financial literacy traits and stock market participation. Additionally, the research used a descriptive and causal comparative approach. The target population of the study consists of all individual investors who are actively trading on the Nepalese stock market. One questionnaire was given to each of the 418 chosen respondents, who are individual investors from the Kathmandu Valley. A minimum bachelor's degree in education is the basis for the sample. The sampling method used in this study is called non-probability sampling. The study collects data using convenience sampling. Primary data is accumulated using questionnaires. Under the data analysis methodology, the study included regression, correlation analysis, and demographic profile analysis. Descriptive statistics, correlation statistics, regression statistics, reliability tests, ANOVA tests, and multi-collinearity tests have been used in the examination. SPSS is used to calculate the necessary statistics. The study found the dependent variable, stock market participation, is positively and significantly influenced by four of the five independent variables: financial knowledge, financial attitude, financial behavior, and financial awareness. In contrast, financial skill exhibits a negative but statistically insignificant relationship with stock market participation.

Key words: Financial literacy, Stock market participation, Financial knowledge, Financial behavior and Financial awareness.