Final Final FYP

8/17/2019 Final Final FYP

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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


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


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


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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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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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

Documents

Final Final FYP