CHAPTER III

METHODOLOGY
3.1 INTRODUCTION

3.2 HYPOTHESIS
According to the above mentioned objectives and in order to achieve them following
set hypotheses are formulated. The hypotheses of this study are as under:-

Factors: Safety of investment, High return, Low risk, Tax saving, Maturity period, Others.

H0: There is no difference in the importance associated with different factors while investing

H1: There is difference in the importance associated among at least two different factors while
investing

3.3 RESEARCH DESIGN

A research design is the frame work of plan for a study that guides the collection and
analysis of data and it is the arrangement of condition and analysis of data in a manner that
aims to combine relevance to the research purpose. In this study an attempt has been made to
investment pattern of investors. The research design used in the study is descriptive in nature.
The main characteristics of descriptive research is that the researcher has no control
over the variables, we can only report what had happened or what is happening, most ex-post
facto research projects used for descriptive studies make the researcher to seek measure for the
items.
A population of investor who invest in banks will be considered for this study. I will
try to explore the investment behaviour of the Investor. Effort will be made to throw light on
most of the factors which have either indirect or direct effect on the behaviour of the
investment.

Since the type of study is descriptive in nature hence the research design will be guided by
following parameters.

1. The Research Problem

The research problem on hand is a to find out investor preference towards the
investment in banking.
 2. Procedures and techniques to be used for gathering information
A proper and balanced combination of observation, questionnaire and interview of
sample population will be adapted by me for gathering information.

3. The population to be studied

In order to bring out some accurate conclusions, it is decided to contact the investor.

3.4 POPULATION OF THE STUDY

The target population must be defined that has to be sampled. The sampling unit of
research included non – members (or) depositors of The Mettupalayam Co-operative Urban
Bank Limited.

3.5 SAMPLING FRAME

3.6 SAMPLING METHOD

Non probability sampling method is used to collect the data from the respondents. In
this study convenience sampling technique has been used to select the respondents.
Convenience sampling is a non-probability sampling technique where subjects are selected
because of their convenient accessibility and proximity to the researcher.
The subjects are selected just because they are easiest to recruit for the study and the
researcher did not consider selecting subjects that are representative of the entire population.
In all forms of research, it would be ideal to test the entire population, but in most cases, the
population is just too large that it is impossible to include every individual. This is the reason
why most researchers rely on sampling techniques like convenience sampling, the most
common of all sampling techniques. Many researchers prefer this sampling technique because
it is fast, inexpensive, easy and the subjects are readily available.

The survey process involved two phases: First phase included identification and
selection of the target audience to be studied and to determine the parameters on which
respondents will justify their preferences. The audience were targeted and analysed basically
on the basis of two important parameters: Age, and Income. Demographical information was
also taken in order to know the investment patterns according to the location, age etc. A
questionnaire was designed to collect the needed information from the respondents.

In the second phase data was collected through questionnaire from around 30
respondents within the branch. Results were viewed cautiously as sample was from a specific
population. The responses that were generated during this exercise were converted in the form
of percentages to have a comparative outlook, as the numbers itself cannot explain the true
picture. These percentages were then represented through the simple tools like bar graphs; pie
charts using MS excel software.

3.7 SAMPLING SIZE

Sample size means number of respondents is to be interviewed for this study. Sample
size of 100 is taken for this study to conduct this research. Roscoe (1975) also recommended
that the thumb rule for appropriate sample size is minimum 30 and maximum 500. Sample size
can also be calculated by following formula for large population or for unknown population –

Sampling size refers to number of respondents to be selected from the bank to constitute
a sample. The sample size of 114 Investors will be taken.

3.8 DATA COLLECTION

In this research two types of data were used
1. Primary data
2. Secondary data

3.8.1 PRIMARY DATA

Primary data is that data which has been collected especially for the purpose of this
newly taken research. This preliminary data for this research project has been collected by the
means of a questionnaire designed to determine those factors which are designated by the
various investors which were important to them in the decision making process. These
questionnaires were completed by this researcher within the confines of Mettupalayam area.
Various Professional/investors/businessmen/student were the locus of this
interviewing/questionnaire filling procedure.

3.8.1.1 Questionnaire Design

The questionnaire is designed in English and Hindi language both so that everybody can
understand and answer the questions asked in it according to their language in which they are
comfortable. In this questionnaire, both type closed-ended and open-ended questions are used.
Maximum questions are closed-ended in this questionnaire and a few questions are open-ended.
As the structure of the questionnaire, it begins with a brief introduction and purpose of the
study as cover page. The questionnaire is divided into six main headings:
▪ Part 1 includes questions related to social demographic and general information
1. Gender
2. Age
3. Marital status
4. Educational Qualification
5. Occupation
6. Annual Income
▪ Part 2 consists questions related to their investment profile.
▪ Part 3 has questions about the different mode of investments preferred by investors.
▪ Part 4 consists of questions related to the level of awareness investors have on different
banking products.
▪ Part 5 consists of questions related to their investment pattern in a year.
▪ Part 6 asks questions about the preference of investors towards various financial
instruments.
▪ Part 7 consists questions about the factors that determines decision making while
investing.
▪ Part 8 consists some questions related to post investment satisfaction level of investors.

Maximum question are asked in five-point Likert Scale format which easy to answer for
respondents. The example of five-point Likert Scale are such as 1= very low, 2= low, 3=
moderate, 4= high, 5= very high.
Lastly, the 114 questionnaires were distributed through online and offline mode to the target
respondents.

3.8.2 SECONDARY DATA

Secondary information was obtained from Investment Magazines, Business Magazines,
Financial chronicles, Trade journals, Expert’s opinion published in various print media, Data
available on internet through various websites, books etc.,

3.9 PERIOD OF THE STUDY

The researcher undertook field work during the period from 21st June 2022 to 29th July
2022 for six weeks. The questionnaire was issued to the investors. The investors were contacted
in the work premises, at The Mettupalayam Co-Operative Urban Bank Limited and the data
were collected. The data thus collected were posted in the master table to facilitate further
processing. Statistical analysis of the data was done through SPSS software in computer.

3.10 PILOT SURVEY

In pilot studies, convenience sample is usually used because it allows the researcher to
obtain basic data and trends regarding his study without the complications of using a sample.
This sampling technique is also useful in documenting that a particular quality of a substance
or phenomenon occurs within a given sample. Such studies are also very useful for detecting
relationships among different phenomena.

To test the reliability of the questionnaire, a pilot study was carried out by contacting
35 respondents and based on the feedback received from some respondents some statements
were modified for easy understanding.

3.11 FRAMEWORK OF ANALYSIS

Since the sources of data for this study are primary as well as secondary. The data
collected from the respondents constitutes primary and secondary data gathered through
national and international journals, books, reports, journals, magazines, dairies are considered
as the secondary. The whole data has been scrutinized, edited and tabulated. The data is
analyzed using SPSS 16 (statistical package for social sciences). The following statistical tools
are used in the study.
Percentage Analysis
Percentage analysis is one of the most useful and basic statistical tools which is
commonly used in analysis and interpretation of primary data. Simple percentages are used in
this study to analyse various variables in the study like socio-demographic factors, investment
motives, level of risk, and return etc.
Chi-square Analysis
Chi-square analysis is used for knowing the association between two variables. Here in
this study, it is used to find the association between variables under demographic factors and
size of investment.
Correlation Analysis
Correlation analysis is used to measure the strength of the association between two
continuous variables. In this study this test is applied to analysed the relationship between
factors of investment.
Following tools are also used -
1. Measures of central tendency and measures of dispersion.
2. Parametric t-test.

The collected data was analysed using SPSS (Statistical Package for Social Sciences) 20.0
version by using the following statistical tools,
Simple percentage analysis,
Mean score analysis,
Correlation analysis,
Independent sample t test,
One-way ANOVA,
Regression analysis.
3.8.1 Percentage analysis
Percentage analysis involves the simple interpretation/analysis of the various items taken up in
the questionnaire on a basis from the data collected. Interpretation of the gaps also include
mean score obtained by the organization on every aspect/item as calculated. This is one of the
widely used methods to analyse the collected data. The percentage method is calculated by
number of respondents divided by total number of respondents, which is multiplied by 100.
The formula is,
 No of Respondents
Percentage = -------------------------------------- X 100
Total no. of Respondents
3.8.2 Mean score analysis
Mean is the simplest measurement of central tendency and is a widely used measure. Its chief
use consists in summarizing the essential features of a series and in enabling data to be
compared. It is amenable to algebraic treatment and is used in future statistical calculations. It
is a relatively stable measure of central tendency. However, mean is better than other averages
especially in economic and social studies where direct quantitative measurements are possible.
Mean calculated by writing the following formula:
𝛴𝑥
𝑥̅ =
𝑁
Where 𝛴𝑥 = summation of the value of the ith item X,1 = 1,2,…..N.
N = total number of items
3.8.3 Correlation Analysis
Correlation is the study of relationship between two or more variables. In statistics, the
coefficient of multiple correlations is a measure of how well a given variable can be predicted
using a linear function of a set of other variables. It is measured by the coefficient of
determination, but under the particular assumption that the best possible linear predictors are
used, whereas the coefficient of determination is defined for more general cases. The
coefficient of multiple determinations takes values between zero and one; a higher value
indicates a better predictability of the dependent variable from the independent variables, with
a value of one indicating that the predictions are exact and a value of zero indicating that no
linear combination of dependent variables is better than the simpler predictor which consists
of mean of the target variable. Karl Pearson’s coefficient of correlation is the most widely used
method of measuring the degree of relationship between two variables.
3.8.4 Independent sample t-test
The Independent Samples t test compares the means of two independent groups in order to
determine whether there is statistical evidence that the associated population means are
significantly different. The Independent Samples t test is a parametric test and is commonly
used when the variances of two normal distributions are unknown. In short, t-test is used to
know each independent variable influence toward the dependent variable. The step in
conducting t test in this research is:
1. Hypothesis formulation
H0: μ = 0 mean that partially the independent variable do not have significant influence on the
dependent variable.
Ha: μ ≠ 0 mean that partially the independent variable has significant influence on the
dependent variable.
2. Determining the degree of confidence of 95% (a = 0.05)
3. Determine the significance
- The value of significance (p value) < 0.05 then H0 is rejected and Ha accepted.
- The value of significance (p value) > 0.05 then H0 is accepted and Ha rejected.
4. Making inferences or conclusion
- When (p value) < 0.05 then H0 is rejected and Ha accepted. This means that the independent
variable partially affect the dependent variable.
- When (p value) > 0.05 then H0 is accepted and rejected. This means that the independent
variable partially not affect the dependent variable.
3.8.5 One Way Analysis Of Variance (ANOVA)
The basic principle of ANOVA is to test for differences among the means of the populations
by examining the amount of variation within each of these samples, relative to the amount of
variation between the samples. In terms of variation within the given population, it is assumed
that the values of (Xij) differ from the mean of this population only because of random effects
i.e., there are influence on (Xij) which are unexplained, whereas in examining difference
between population we assume that the difference between the mean of the jth population and
the population and the grand mean is attributable to what is called a ‘specific factor’ or what is
technically described as treatment effect.
3.8.6 Regression Analysis
Regression analysis is a statistical tool for the investigation of relationships between variables.
Usually, to ascertain the causal effect of one variable upon another. The multiple regression
analysis has been administered to find out the impact of independent variables on the dependent
variable when both variables are in interval scale. The ordinary Least Square (OLS) has been
followed to fit the regression model (Jacques, 1997). The fitted regression model is,
Y = a + b1 X1 + b2 X2 + …. Bn Xn +e
where
Y - Dependent variable
X1, X2, … Xn - Independent variables
b1, b2… bn - Regression co-efficient of independent variables
a = Intercept and
e = error term