PERCEPTION OF INDIVIDUAL INVESTORS TOWARDS INVESTMENT IN NEPALESE STOCK MARKET

Abstract

Investment in stock market is becoming a trend nowadays in Nepal. People are being more aware of investment in Stock market. In past one year, significant increment is being seen in number of investors and transaction volume of stock market transactions in NEPSE. As per the recent data of February 2021 the market capitalization of NEPSE reaches largest since its establishment period however during the July 2022 the market capitalization of NEPSE is decreasing as compared to data of one year before this research. By analyzing the current scenario, this study is conducted in order to find out how Nepalese individual investors of stock market perceive about investing in stock market and what factors are mainly influential on their investment decision. This study is based on the primary data collection from individual investors who are actively investing in Nepalese stock market. Total of 547 respondents were taken as a sample for this study and convenience sampling method was used for data collection. The constructs for the independent variable is taken from empirical research and constructs for dependent variable is prepared by researcher herself. This study follows the causal comparative research design in order to infer the impact of five different independent variables namely accounting information, advocate recommendations, self-image/firm-image coincidence, neutral information and personal financial needs on investment decision of Nepalese stock market investors. The data analysis consists of descriptive as well as inferential statistics. Descriptive statistics used under this study are frequency, percentage, mean and standard deviation in order to describe the characteristics of the data. Descriptive statistics especially mean and standard deviation shows that all the five independent variables have positive contribution in measuring the impact on individual investment decision which can be demonstrated by the mean value greater than three in five-point Likert scale. This means, majority of the respondents are agreed upon the statement presented to them to measure the impact of independent variables on individual investment decision. Similarly, under the inferential statistics, correlation and regression were used. Under the correlation analysis, it has been found that all five variables namely accounting information, advocate recommendations, self-image/firm-image coincidence, neutral information and personal financial needs have positive correlation with individual investment decision. Similarly, under regression analysis, it has been found that two xii variables namely accounting information and personal financial needs have significant positive impact on individual investment decision. In contrast, other three variables namely advocate recommendations, self-image/firm-image coincidence and neutral information have been found insignificant with individual investment decision at 5% level of significance. Based on the data analysis and findings, it can be concluded that Nepalese stock market investor’s decision is mostly affected by accounting information related factors as well as by their own personal financial needs related factors. On the other hand, factors under advocate recommendations, self-image/firm-image coincidence and neutral information related factors do not affect that much in decision making of individual investors towards Nepalese stock market. Finally, it is recommended to all the current as well as potential investors that they should carefully analyze all the relevant aspects regarding individual needs as well as firm level and national level indicators while making investment in share market. Also, it is recommended to regulatory authorities to make and improve those policies which will generate a favorable environment for all the current as well as potential investors by remaining in some ethical and legal boundaries. No substantial research has been found in this field in Nepal. Therefore, this study will be very much fruitful for all the current and potential investors in understanding how Nepalese stock market investors perceive about investing in stock market and what the influential factors on their investment decision are. Moreover, this study is also important for different stock market related government and non-government authorities as they are the one who make and implement policies and regulations regarding this field.