Transcript
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IntroductionFinancial literacy refers to the
knowledge and understanding ofnancial concets! resulting in thea"ility to make informed! condent ande#ecti$e decision regarding money%
Financial roducts are now increasinglydi&cult to access for eole unfamiliar
with nancial and economic concets%
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'ro"lem (he knowledge of the nancial market
en$ironment is an imortant factor inin)uencing the stock marketarticiation of indi$idual andinstitutional in$estors%
Financial literacy attracts newerin$estors and also in)uences e*isting
in$estors to articiate more is animortant issue%
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+",ecti$e (o measure the le$el of relationshi
"etween eole who are nanciallyknowledgea"le ha$e understanding of"asic concets of nance and arefamiliar with the characteristics ofnancial markets and stock marketarticiation
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'urose of the .tudy and .coe (he urose of this research is to nd out whether
eole are aware of nancial markets andin$estigate the le$el of in$ol$ement in stockmarkets.
Scope:Focuses only on the residents of /arachi%
(he nancial literacy is reresented "y certain$aria"les%
(he market articiation is considered to meanonly "uying and selling of stock in the sot market%
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aria"lesIndependent Variables
2asic Financial literacy
Ad$ance nancial literacy
ependent Variables:.tock Market 'articiation
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3yothesis!"4 (here is a relationshi "etween the
understanding of "asic concets of nanceand the le$el of stock market articiation%
!#4 (here is a relationshi "etween theknowledge of Financial markets and le$el ofstock market articiation%
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'oulation and .amle .izeP$P%LA&I$'
(he num"er of deositary account holders in/arachi% According to the latest gures "y the.tate 2ank of 'akistan there are 58%71 million
account holders in 'akistan% hile in /arachi thereare around 1%9 to 1%: million account holders%
SAMPL( A' SAMPLI') M(&!$
(he samle size of 500 has "een taken% .amlingmethod is con$enience .amling and the reasonfor using this samling method is that it wouldro$ide me data from all demograhics which Iwant to study%
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Analysis and Findings
Participation in Stock Exchange
Frequency Percent Valid PercentCumulative
Percent
Valid Yes 138 69.0 69.0 69.0
No 62 31.0 31.0 100.0
otal 200 100.0 100.0
138 res!ondents t"at is 69# !artici!ated $"ile t"e remainin%
62 res!ondents t"at is 31# do not !artici!ate in t"e stoc&mar&et.
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Occupation
Frequency Percent Valid PercentCumulative
Percent
Valid Student 66 33.0 33.0 33.0Teacher 2 1.0 1.0 34.0
Banker 2 26.0 26.0 60.0
Bu!ine!!man "4 3".0 3".0 #".0
$ther! 6 3.0 3.0 100.0
T%tal200 100.0 100.0
;emograhics
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Gender
Frequency Percent Valid PercentCumulative
Percent
Valid &ale143 "1. "1. "1.
Female" 2'. 2'. 100.0
T%tal200 100.0 100.0
%:< of the resondents were male! while 58%:< of the resondents were femal
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Age
Frequency Percent
ValidPercent
Cumulative Percent
Valid 1 ( 2 "0 3.0 3.0 3.0
26 ( 3 1 ". ". 42.
36 ( 4 3 26. 26. 6#.0
46 ( ' 2#.0 2#.0 #'.0
6 ( 6 4 2.0 2.0 100.0
T%tal 200 100.0 100.0
Monthly Income
Frequency Percent Valid PercentCumulative
Percent
Valid )er% 2 26.0 26.0 26.0
10*000 ( 20*000 12 6.0 6.0 32.0
20*000 ( 40*000 11 . . 3".
40*000 ( 60*000 12 6.0 6.0 43.
60*000 ('0*000 3# 1#. 1#. 63.0
+,%ve '0*000 "4 3".0 3".0 100.0
T%tal 200 100.0 100.0
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Differences in stock buying pattern across
different age groups
'%e
otal1( ) 2( 26 ) 3( 36 ) *( *6 ) (( (6 ) 6(+evel o,
Partici!ationVery
Frequent0 * 20 2* * (2
Frequent * 0 33 32 0 69
-ometimes 8 ( 0 2 0 1(
arely 8 0 0 0 0 8
Never (0 6 0 0 0 (6
otal /0 1( (3 (8 * 200
Ma,ority of the share holding attern is concentrated "etween age96 ::! that is =8< of resondents "elonging to this age grouarticiate in the stock market%hile in the age "racket >1: 5:? mostly comrising of students
don@t in$est in stock market%
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Differences in stock buying pattern across
different occupations
ccu!ation
otal-tudent eac"er an&er usinessm
an t"ers
+evel o,
Partici!ation
Very
Frequent0 0 1* 38 0 (2
Frequent 2 0 3* 31 2 69
-ometimes
8 0 * 1 2 1(
arely * 0 0 2 2 8
Never (2 2 0 2 0 (6
otal 66 2 (2 /* 6 200
2ankers and "usinessmen showed the highest ercentage of stockownershi i%e% 100< and =%9
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Differences in stock buying pattern across
different income levels
Differences in stock buying pattern across different income levels
ont"ly ncome
otal4ero105000 )205000
205000 )*05000
*05000 )605000
605000 )805000
'ove805000
+evel o,Partici!ation
VeryFrequent 0 0 0 2 12 38 (2
Frequent 2 0 2 / 2/ 31 69
-ometimes ( 2 3 1 0 * 1(
arely 2 * 2 0 0 0 8
Never *3 6 * 2 0 1 (6otal (2 12 11 12 39 /* 200
Almost 100< resondents articiate in the stock market that ha$emonthly a income a"o$e s% 60!000%Bhances of holding stocks increase with income and this can "e ro$enfrom the a"o$e ta"le "ecause resondents who ha$e zero income ne$er
articiate in the stock market i%e% 85%
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Differences in stock buying pattern Based on the
level of understanding of financial environment
7nderstandin% o, ,inancial nvironment
otalVery+o$
Neutr al i%"
oderately i%"
Veryi%"
:o Not&no$
e,usal
+evel o,Partici!ation
VeryFrequent 0 2 16 2* 10 0 0 (2
Frequent 0 / 23 30 9 0 0 69
-ometimes
0 / ( 3 0 0 0 1(
arely 0 2 6 0 0 0 0 8
Never 3 18 1* 16 0 3 2 (6otal 3 36 6* /3 19 3 2 200
100< resondents who ha$e $ery high understanding of nancialen$ironment articiate in the stock market% 7< of the resondents arewith moderately high nancial en$ironment knowledge who articiate
in the stock market%
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68%:< of the resondents who ha$e high understanding of thenancial en$ironment articiate in the stock market%
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Financial Literacy and Stock arket
Participation
2asic FinancialCiteracy
BorrectIncorrect
'articiation in
.tock Market Des 7%=6< 76%:0<
Eo 5:%07< :9%:0<
(otal100%00
<100%00
<
*ASIC FI'A'CIAL LI&(+AC, 7< resondents who articiate answered correctly%5:< resondents who don@t articiate answered correctly%
0%00<
10%00<
50%00<
90%00<
70%00<
:0%00<
60%00<
0%00<
80%00<
*asic Financial literacy
'articiation in.tock Market Des
'articiation in.tock Market Eo
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Ad$anceFinancial
Citeracy
BorrectIncorrect
'articiation in.tock Market
Des 1%86< ::%=<
Eo 58%17< 77%09<
(otal100%00
<100%00
<
AVA'C( FI'A'CIAL LI&(+AC, 1%86< resondents who articiate answered correctly%::%=< resondents who don@t articiate answered correctly%
0%00<10%00<
50%00<
90%00<
70%00<
:0%00<
60%00<
0%00<80%00<
Adance Financial Literacy
'articiation
in .tock
Market Des
'articiation
in .tock
Market Eo
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3yothesis (esting
Correlations
Partici-ati%
n Pattern
,a!icliterac
y
Partici-ati%n
-attern
Pear!%n C%rrelati%n 1 ."0
Si. /2(tailed.000
200 200
,a!icliteracy Pear!%n C%rrelati%n ."0 1
Si. /2(tailed.000
200 200
Correlations
Partici-ati
%n Pattern advance
Partici-ati%n
Pattern
Pear!%n C%rrelati%n1 .03#
Si. /2(tailed.001
200 200
advance Pear!%n C%rrelati%n.03# 1
Si. /2(tailed.001
200 200
!"4 (here is a relationshi "etween the understanding of "asicconcets of nance and the le$el of stock market articiation%!#4 (here is a relationshi "etween the knowledge of Financialmarkets and le$el of stock market articiation%
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elations"i! et$een t"e &no$led%e Financial
nvironment and stoc& mar&et !artici!ation.
Correlations
inenvir%nevel %
Partici-ati%n
inenvir%n Pear!%nC%rrelati%n
1 .306
Si. /2(tailed .000
200 1##
evel % Partici-ati%n Pear!%nC%rrelati%n
.306 1
Si. /2(tailed .000
1## 1##
(he ' $alue is 0%000 which is less than 0%0: signicancele$el so it reresents that the results are statisticallysignicant% (he $alue 0%906 shows that there is a ositi$e"ut a weak correlation "etween the two $aria"les%
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Conclusion
'eole usually refer to "uy gold or real estate rather in$estingin some kind of securities% 2ut if they are in$esting in securitiesthey go for much safer ones i%e% go$ernment sa$ing certicatesetc%
.ince eole ha$e limited nancial resources they refer tosa$e it for future%
;i#erences in stock "uying attern across di#erentdemograhic $aria"les also showed signicant results%
(he results of correlation "etween the indeendent $aria"lewith the deendent $aria"le are ositi$e which shows all the$aria"les ha$e a ositi$e relationshi with stock market
articiation which means eole do articiate in stock market"ecause of the nancial knowledge%
;escriti$e results also show that eole who articiate instock market ha$e more le$els of nancial literacy and theunderstanding of nancial en$ironment%
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ecommendations
Financial literacy stimulates the demand side makingeole aware of what they can and should demand% Asshown in the research that nancial literacy isimortant determinant of stock ownershi and stockmarket articiation is imortant for many reasons
such as it facilitates asset accumulation andconsumtion smoothing%
More nancial literacy rograms "y the go$ernment%
Further research could "e done to in$estigate the e#ectof other uncontrolla"le $aria"les such as olitical
insta"ility and its e#ect on nancial en$ironment! lawand order situation in the country and its e#ect onnancial en$ironment%
'resence of market layers and cororate in$estors
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(hank Dou
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