Determinants of Students’ Investment Perception towards

Nepalese Stock Market

By
Aayushi Shrestha
Exam Roll No: 22433/18
TU Registration No: 7-2-39-1706-2018

A Summer Project Report Submitted to

Faculty of Management, Tribhuwan University
In partial fulfilment of the requirements for the degree of
Bachelor of Business Administration

at the
Shanker Dev Campus
Tribhuwan University

Putalisadak, Kathmandu
December, 2022

1
CERTIFICATE FROM THE SUPERVISOR

This is to certify that the Summer Project entitled ‘Determinants Influencing Students’
Investment Perception towards Nepalese Stock Market’ is an academic work done by
‘Aayushi Shrestha’ submitted in the partial fulfilment of the requirements for the degree of
Bachelor of Business Administration at Faculty of Management, Tribhuwan University
under my guidance and supervision. To the best of my knowledge, the information presented

by him/her in the Summer Project Report has not been submitted earlier.

Bharat Pant Ramesh Kumar Paudel

Supervisor Supervisor

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3
 ACKNOWLEDGEMENT

This project has been prepared as partial fulfilment for the requirement for the degree of
Bachelor in Business Administration (BBA) four years program offered by Tribhuvan
University.

It took me quite a long time to bring out this summer project in this form. I had to take help
with faculty members, books, internet, senior guidance and peers. I want to thank everyone
who helped me directly and indirectly to accomplish my project. This project work has
encouraged me to be tactful as well as resourceful and also sharpen mycreativity.

First of all, I would like to thank Mr. Bharat Pant and Mr. Ramesh Kumar Paudel, my
supervisor of this research for providing all the guidance and direction for preparing this
report. Without their guidance this report would not have been completed. Moreover, I am
thankful to Mr. Dhurva Subedi, BBA Director and Mr. Keshav Raj Joshi, Campus Chief of
Shanker Dev Campus who provided me the platform for conducting this research. My
gratitude to all friends and seniors who helped me from the beginning to the end of this report
as they helped me for the selection of research topic directly or indirectly and to become
familiar with data analysis tools and software.

Moreover, I would like to thank every respondent of my questionnaires for their time and
effort. Without their help I would not be able complete this research report on time. This
report got its final shape with their assistance. So, it is my honour to thank all these
respondents.

Sincerely,
Aayushi Shrestha

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Table of Contents
CERTIFICATE FROM THE SUPERVISOR................................................................................2
ACKNOWLEDGEMENT..............................................................................................................3
LIST OF ABBREVIATIONS.........................................................................................................6
Chapter I.........................................................................................................................................1
1. Introduction.............................................................................................................................1
1.1.Background............................................................................................................................1
1.2. Purpose of the Study.............................................................................................................2
1.3. Significance of the Study......................................................................................................2
Literature Review...........................................................................................................................3
1.4 Empirical Review...................................................................................................................3
1.5. Conceptual Review.............................................................................................................14
1.6 Conceptual Framework.......................................................................................................15
1.7. Hypothesis Development.....................................................................................................16
Research Methodology..................................................................................................................16
1.8 .Research design...................................................................................................................16
1.9 .Nature and Sources of Data.........................................................................................16
1.10. Population and Sample.....................................................................................................17
1.11. Sampling technique...........................................................................................................17
1.12. Sample Area......................................................................................................................17
1.13. Sample Size........................................................................................................................17
1.14. Unit of Analysis.................................................................................................................17
1.15. Data Gathering Procedure...............................................................................................17
1.16 Data Analysis Procedure...................................................................................................17
1.17. Methods of Analysis..........................................................................................................18
CHAPTER II.................................................................................................................................19
2. Data Presentation and Analysis................................................................................................19
2.1. Respondent Profile..............................................................................................................19
2.2Investment Perception..........................................................................................................20
2.3 Cronbach Alpha Reliability Test........................................................................................21
2.4 Correlation Analysis............................................................................................................25
2.5 Testing of Hypothesis...........................................................................................................27
2.6 Major findings.....................................................................................................................28
CHAPTER III...............................................................................................................................29

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3. Conclusion and Action Implementations..................................................................................29
3.1. Conclusion...........................................................................................................................29
3.2. Action Implications.............................................................................................................30
D. Limitations of the study..............................................................................................................1
Reference.........................................................................................................................................2
ANNEXES.......................................................................................................................................5

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LIST OF ABBREVIATIONS

ANOVA: Analysis of Variance

SPSS: Statistical Package for Social Science
FB: Financial Behaviour
IP: Investment Perception
PD: Past Dividend
FL: Financial Literacy
RT: Risk Tolerance

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Chapter I

1. Introduction

1.1. Background
Nepalese capital market is very small and unorganized in comparison to other developed
stock exchanges. The number of brokers, listed companies, transaction volume and sources
of information is very less. Moreover, investors are not fully aware about the merits and
demerits of the stock market. There are many factors that actively plays an important role
in any investor’s decision where the underlying fact is that the extent of influence of those
factors depend upon individual personality as well. The growing stock market in Nepalese
context shows the active involvement of youngsters (Kadariya, 2012) Investment decisions
are closely related to financial management decisions. Financial management is part of
financial literacy. Creating financial literacy intervention is an obvious and a common-
sense response to the increased complexity of the financial world. Investors are never to be
afraid to invest in the capital market because it is safe if the selected securities company
has been registered with the FSA. Investors are never to be afraid to invest in the capital
market because it is safe if the selected securities company has been registered with the
FSA Kusumaningrum et.al (2019). In the recent times there is more attraction towards
stock market among the investors. Investors are attracted towards increasing opportunities
provided by the stock market that basically underlies the common belief of increasing the
value of investment without having to spend a lot of time and effort. Investment in the
stock market have got a new revolution with the emerging concept of behavioural finance.
Behavioural finance states the relationship between the investor’s behaviour and their
money which is basically related to the investor’s perception towards their investment
decisions to be rational even though they often tend to make irrational decisions based on
some extraneous variables (Singh & Yadav, 2016). There is increasing investors in which
student also plays vital role in investment.

Thus, this study attempts to show the determinants of investors’ perception towards stock
market. Study of student perception is an emerging issues in the context of investment with
the increasing market opportunity.

1
Research question

 Is there any significant influence of financial behaviour on the students’ investment

perception?
 Is there any significant influence of risk tolerance of students’ investors on the
investment perception?
 Is there any significant influence of financial behaviour on the students’ investment
perception?
 Is there any significant influence of past dividends on the students’ investment
perception?

1.2. Purpose of the Study

As we can see that there is the increasing involvement of students in stock market and their
investment decision is affected by numerous factors, it has become essential to identify the
factors affecting the decision of investment.
The purposes of this study are as follows:
 To identify different factors affecting the perception of students towards stock
market.
 To assess the perception of students towards stock market.
 To examine the knowledge of students towards stock market
1.3. Significance of the Study

 It helps to know the perception of student regarding investment in stock market.

 It helps analyse the investment behaviour of the student,
 It helps to examine the risk tolerance capacity of the student investors.
 It will help to identify the factors that influence students in stock market decision
making behaviour in stock market.
 It helps to find the impact of dividend paid in students investing behaviour.

2
Literature Review

1.4 Empirical Review

Various previous studies have been conducted to measure the perception of investors
towards stock market. These studies have considered various variables that are mostly
considered by investors while making any investment decision. According to the study
conducted by (Volpe, Chen & Pavlicko, 1996) College students have inadequate
knowledge of personal investment. Similarly, it was also concluded that female students
are less knowledgeable about investing than male students and non-business majors are
less knowledgeable than business majors.

The study on ‘Investors perception towards investors decision in Equity market’ by

(Varadharajan & Vikkraman, 2011). To conduct this research sample of 50 was taken.
Descriptive research design was used, and data was collected through questionnaire. The
data were analysed through ANOVA. The main objective of this research was to identify
the investment pattern through certain key factors those influence the decision making of
investors/traders in equities. The findings of (Varadharajan & Vikkraman, 2011) suggested
that undergraduates and people into business are involved with trading/investing into stock
markets. Brokers’ recommendation and opinions taken from a friend or a family have a
least influence in decision making. Buying low priced stocks, stocks with good corporate
earnings, dividend announcements, buying stocks that can be easily sold, firm’s reputation
and current economic indicators play a crucial factor in taking decisions.

(Kadariya, 2012) conducted the research on the topic ‘Factors affecting investors decision
making: A case of Nepalese capital market’. For this purpose, sample of 185 students was
taken. The data collection method used was structured questionnaire method (Kadariya,
2012)conducted the research to analyse the market reactions in Nepalese stock market by
collecting the data through structured questionnaire from stock investors. The analysis
showed that many of the investors are young, and the proportion of the educated investors
are high in the market. The most influencing factor for decision making is media and
friends. It also showed that belief in luck and financial education also has impact on
investment decision.

3
The research named ‘Relationship between financial literacy and investment behaviour of
salaried individuals’ was conducted by (Bhusan, Relationship betweeb Financial Literacy
and Investment Behaviour of Salaried Individuals, 2014). For this purpose, the sample of
516 people was taken and data were collected through structured questionnaire. As per the
research conducted on the relationship between financial literacy and investment pattern of
salaried individuals it was found that respondents in high financial literacy group have high
knowledge about the financial products (Bhusan, Relationship betweeb Financial Literacy
and Investment Behaviour of Salaried Individuals, 2014). Therefore, it was implied that
due to low level of financial literacy investors invest their money in traditional financial
products and are not able to take the advantage of new age financial products which can
offer them higher returns.

According to (Singh & Yadav, 2016), both male and female investors consider past
dividends paid by companies while investing in equity shares. Male investors study daily
reports published by stock exchanges investing in the equity shares as compared to female
investors. Both male and female investors accept the recommendations given by trusted
and reputed stockbrokers or experts while investing in equity shares. Female investors give
more importance to the advice given by their friends and relatives.

(Joshi & Batra, 2017) conducted research on the topic ‘Factors affecting investor’s decision
in stock market’ by using descriptive research design with sample of 200. The research
instrument used for the study was structured questionnaire, newspapers, magazines, and
various research articles students. (Joshi & Batra, 2017) showed that investors prefer long
term investment that short term. They also consider the P/E ratio and EPS for analysing
performance of the company.

(Vakil, 2018) showed that educational campaign influence investors’ perception. actors such
as EPS, ROE, D/E ratio, price to earnings ratio are considered by investors while making
the investment decision.

According to Kusumaningrum et.al (2019) financial literacy has a positive effect on risk
tolerance, Investment Experience has a negative effect on risk tolerance, Risk Tolerance
4
has no effect on investment decisions, and Risk Tolerance is not able to mediate Literacy
and Investment. Descriptive and relational research design were used to collect data.

(Risal, 2020) conducted study on the topic ‘The psychology of investors in Nepalese stock
market and investment decisions.’ The sample of 384 was taken as a representation of
whole population. The data were collected through structured questionnaire and analysed
by using mean, standard error, t-test statistic, correlation, and regression analysis through
SPSS software. The study of (Risal, 2020) revealed that past performance of the company,
dividend policy, market price, friend’s recommendation economic indicators and stock
price movements were the basis of investment decision.

(Gnawali, 2020) conducted research on the topic ‘Perception of investors towards initial
public offering (IPO) in Nepal: with reference to Kathmandu District’. Descriptive and
explanatory research design was adopted. Out of the total sample of 320 only 290 of them
responded. The data collected was analysed through SPSS. The research indicated that
company goodwill, company performance and market information are major factors that
largely affect in perception in investment decision in IPO. Company sector and quality
management are also highly considerable factors.

(Hamal & Acharya, 2022), financial literacy level and student’s stock market participation
are positively associated with each other. Descriptive and relational research design were
used in this study. Questionnaire were used to collected data from the sample.

Normalasari et.al (2022) studied on effect of Financial Behaviour, Financial Literacy, and
Ethnic. Objective of this study was to know the extent of the impact of dependent
variables on students' investment decision making. This study showed Financial Behaviour
and Financial Literacy have a significant positive effect on students' investment decision-
making while Ethnic as Demographic Factor has no significant effect on students'
investment decision-making.

Sources Major objective Methodology Findings

5
 - To determine the
Normalasari Research Design: -This study shows that
effect of Financial
et.al (2022) Behavior, Descriptive and Financial Behavior and
Financial Literacy, Financial Literacy have
Correlational
and Ethnic and to
a significant positive
know the extent of Nature and sources of
the impact of effect on students'
dependent data: Primary data
investment decision-
variables on
students' Research instrument: making while Ethnic as
investment Questionnaire Demographic Factor
decision making. has no significant effect
Population and
on students' investment
Sample: 96
decision-making.
Data Collection:
Through structured
questionnaire

Data Analysis:
Descriptive statistics
and linear regression
analysis

To discover the
(Hamal & Research Design: The finding
relationship
Acharya, 2022) between students’ Descriptive and concludes that
financial literacy financial literacy
level and their relational research
stock market level and student’s
design.
participation. stock market
Nature and sources of
participation are
data: Primary data
positively associated
Research instrument: with each other.
Questionnaire

Population and
Sample:

134

Data Collection:
Through structured
6
 questionnaire

Data Analysis:
Descriptive statistics
and Spearmen rank
correlation analysis.

To examine  Company
(Gnawali, 2020) Research Design:
perception of goodwill,
Descriptive and
investor towards company
explanatory
IPO, to analyse the performance and
relationship Nature and Sources of market
between different Data: Primary data information
factors (Quality Research Instrument: largely affect in
management, Questionnaire perception in
Company investment
Goodwill, Population and decision in IPO.
Company Sample: 320
Company sector and
performance, Data collection:
Company sectors Through questionnaire quality management
and Market
Data Analysis: SPSS also are the highly
information
considered factors.

To analyse the
(Risal, 2020) Research Design: Majority of the
factors affecting respondents belongs
the psychology of Descriptive and
to the age group of
investor on analytical
20-40 years.
investment Nature and sources of
decision in stock Majority of
data: Primary
market respondent had
Research Instrument: college level
Structured education.
questionnaire Investors were
Population and making past
sample: 384 performance of the
company as the basis
Data collection: of investment
Questionnaire decision.
Data analysis: Mean, The dividend policy,
standard error, t-test market price was
used as indicator of
statistic, correlation, investment decision.
and regression analysis Friend’s
through SPSS software recommendations,

7
 economic indicators
and stock price
movements had
affected the investor
investment decision.
The least important
factors affecting
investment decisions
were ethical value,
suggestions from
broker houses,
opinion of family
members, feelings for
a company’s products
and firm’s
involvement in
solving community
problems.

-to examine the Research Design: The results of this

Kusumaningrum
factors that
et.al (2019) study indicate that
influence Descriptive and
investment financial literacy has
relational research
decisions.
a positive effect on
design.
risk tolerance,
Nature and sources of
Investment
data: Primary data
Experience has a
Research instrument: negative effect on
Questionnaire risk tolerance, Risk

Population and Tolerance has no

Sample: effect on investment

decisions, and Risk
150
Tolerance is not able
Data Collection: to mediate Literacy
Through structured and Investment

8
 questionnaire Experience on
Investment
Data Analysis:
Decisions.
Partial least square
analysis.

(Vakil, 2018) To identify the Research Design: -Factors such as EPS,

factors that affect
Descriptive and ROE, D/E ratio, price
the investors while
selecting any analytic to earnings ratio are
company’s IPO
considered by
i.e. transparency, Nature and Sources of
convenience, investors while
Data: Primary data
liquidity and past
making the
performance Research Instrument:
investment decision
Questionnaire
-Educational
Population and
campaign also
Sample: 150
influence the
Data collection: investors perception
Through questionnaire

Data Analysis: SPSS

(Joshi & Batra, To study the Research design: Investors prefer to

2017) factors affecting Descriptive invest for long term
investment in stock market than
Nature and sources of
decision in Indian short term
data: Primary and
Stock Market investment.
secondary data
Investors consider
Research Instrument:
financial performance
Structured
of the company
questionnaire,
through P/E ratio and
newspapers, magazines
EPS.
and various research
articles They consider
government policy
Population and
for the industry and
sample: 200
growth rate of
Data collection: industry while
Through questionnaire selecting industry and
Data Analysis: consider global
Descriptive analysis economic condition.

9
 Few of the investors
are also of the
opinion that luck
factor also affects
their performance in
stock market.

(Singh & Yadav,

To identify factors Research Design: -Both male and
2016)
influences and
Quantitative female investors
motivates the
investor while consider past
Nature and Sources of
investing in equity
dividends paid by
market Data: Primary and
companies while
secondary data
investing in equity
Research Instrument:
shares.
Questionnaire
-Male investors study
Population and
daily reports
Sample: 100
published by stock
Data Collection: exchanges investing
Through questionnaire in the equity shares as
method compared to female
Data Analysis: T-test investors
and mean scores
-Both male and
female investors
accept the
recommendations
given by trusted and
reputed stock brokers
or experts while
investing in equity
shares.

-Female investors
gives more
10
 importance to the
advice given by their
friends and relatives

(Bhusan, 2014) To examine the Research Design: -There is positive

relationship Qualitative relationship between
between financial financial literacy and
Nature and source of
literacy and awareness level of
data: Primary data
investment financial products
Research instrument:
behaviour of -Investors with low
Questionnaire
salaried level of financial
individuals Population and
literacy tends to
sample: 516
invest more in
Data Collection: traditional financial
Through structured products
questionnaire

Data Analysis: SPSS

16.0

(Kadariya, 2012) To analyse the Research Design: Capital structure and

Descriptive and average pricing
market reactions
Correlational method influence the
to tangible investment decision.
Nature and sources of
information and data: Primary data Political and media
coverage also
intangible Research instrument:
influence
Questionnaire
information in investor decision
Population and making.
Nepalese stock Sample: 185
Belief on luck and
market and know Data Collection: financial education
investors opinions Through structured also has impact upon
questionnaire investment decision.
in Nepalese stock
Data Analysis: Stock market
market
Descriptive statistics movement is also
and correlational affected by trend
analysis analysis

11
(Varadharajan & To identify the Research Design: Stock affordability,
investment pattern stocks with good
Vikkraman, 2011) Descriptive
through certain corporate earnings,
key factors those Nature and sources of dividend
influence the data: Primary and announcements,
decision making secondary data buying stocks that
of Research instrument: can be easily sold,
investors/traders firm’s reputation and
in equities Questionnaire, books, current economic
journals, and websites indicators pay a
To identify the
Population and crucial factor in
activities that is
Sample: 50 taking decisions.
involved while
trading if to take Data collection: Undergraduates and
up the opinions or people into business
recommendations. Through questionnaire are involved with
Data analysis: trading/investing into
stock markets
ANOVA
comparatively with
the people in other
categories.
Brokers’
recommendation and
opinions taken from a
friend or a family
have a least influence
in decision making.

(Voipe, 1996) To examine Research Design: College students have

college students’ Descriptive inadequate
knowledge of knowledge of
Nature and source of
personal data: Primary data personal investment.
investment and the
relation between Research instrument: Female students are
the level of Questionnaire less knowledgeable
investment Population and about investing than
literacy and Sample: 437-454 male students.
gender, academic
discipline, and Data Collection: Non-business majors
experiences Through Structured are less
Questionnaire knowledgeable than
Data Analysis: Two- business majors
tailed median test

12
Empirical Review (Meta Table)

13
1.5. Conceptual Review

Concept of investment perception

Investment is a number of funds issued in the hope of gaining profits in the future.
Investment according to the time dimension is divided into two, namely long-term
investments with instruments on real assets such as land, buildings, office equipment,
vehicles, investments in stocks and bonds. While short-term investments are investments in
current assets such as cash, accounts receivable, inventory, and securities Kusumaningrum
et.al (2019). According to (Panga, Malpani, & Malpani, 2018) any investor who do
personal investment of his fund in the capital market with the various objectives of future
benefits and who takes the financial decisions of his own called individual investor..
Perception is the personal feeling of any investors toward an object. In the case of
investment, the perception of an investor is affected by many factors out of which his
psychology is very important (Panga, Malpani, & Malpani, 2018).

Financial literacy

Financial literacy is the ability to understand financial products and the financial market.
There are large varieties of financial products and also the financial market is much
diversified, so financial literacy is further classified into basic financial literacy and
advance financial literacy. Students possessing both basic and advance financial literacy
are considered financially literate and will therefore be encouraged to participate in the
stock market (Hamal & Acharya, 2022).

Financial behaviour

How a person manages, treats, and uses the financial resources that are accessible to him.
Individuals who practice prudent financial conduct are more likely to be productive with

14
their money (Nababan & Sadalia, 2012). Financial Behavior has a significant positive
effect on students' investment decision-making.

Risk tolerance

Risk Tolerance is the level of risk where a person feels comfortable or in other words a
level of risk where investors want to make an investment (Dalton and Dalton, 2004). Risk
tolerance does not affect investment decisions influenced by several other factors such as
trust and investment duration. Risk Tolerance has no effect on investment decisions, and
Risk Tolerance is not able to mediate Literacy and Investment Kusumaningrum et.al
(2019).

Past Dividends
Dividends are, paid in the shape of cash or stock. Cash dividend declaration is depending on the
earnings growth as well as expansion strategy of the organization. However, if the company
discloses dividend related information before declaring dividend, investors can expect dividend
growth. Inversely, if the company does not disseminate dividend related information then the
negative perception arises on dividend growth. In this regard, investors are concerned whether the
organization is performing well or has any other negative intention? This states that positive
dividend announcements can carry positive signal to shareholders that may indicate
regarding better prospects of the firm (Dewri, Islam, & Arifuzzaman, 2015).

1.6 Conceptual Framework

Independent variable

Financial Literacy

Dependent Variable
Financial Behavior
Student’s Investment
Perception
Past Dividend
15
 Risk Tolerance

Source: Normalasari et.al (2022) and Kusumaningrum et.al (2019)

Fig: Conceptual Framework

1.7. Hypothesis Development

From the given conceptual framework hypothesis for the research can be developed. In this
research, null hypothesis shows the significant relationship between independent and
dependent variables whereas alternate hypothesis shows that there does not exist
significant relationship between independent and dependent variables. The null hypothesis
for the research is listed as below:

H1: There is significant relationship between Financial Behavior and investment

perception.
H2: There is significant relationship between Financial Literacy and investment
perception.
H3: There is no significant relationship between risk tolerance and investment perception.
H4: There is significant relationship between past dividend and investment perception

Research Methodology

1.8 .Research design

Descriptive and correlational research design will be applied in this study. 200 samples
will be taken for the purpose of studying student’s perception towards stock market.
Closed ended questionnaires will be prepared, and the responses will be measured in 5

16
Likert Scale. Open-ended questionnaires will also be made to make qualitative analysis.
Statistical tools will be used to analyse the responses of the samples. The analysis of the
findings will be done by using mainly descriptive statistics and correlation analysis.

1.9 .Nature and Sources of Data

The data collected from the management students inside Kathmandu Valley will be
quantitative in nature. For the purpose of measuring student’s perception questionnaire will
be made where the students can give response in the scale from 1 to 7, each scale
representing what students agree and disagree. The data were collected through primary
sources from the students studying management. Since the data is measured in Likert scale
it is quantitative in nature.

1.10. Population and Sample

The students who study management and reside in Kathmandu valley are the population of
the research. The research mainly focus on finding the factors that influence the investment
perception of students. A sample size of 248 students were taken.

1.11. Sampling technique

The research was conducted through non-probability sampling. Convenient sampling will
be used so that the data collection will be easy and less time consuming.

1.12. Sample Area

The sample is taken from the students inside the Kathmandu city. The data collected from
these sample is used to analyse the investment perception of students

1.13. Sample Size

The sample size is 248 students who are living in Kathmandu city.

1.14. Unit of Analysis

The research is done to analyse the factors that determine the perception of students while
making any investment decision. The unit for the data analysis is the students of
management faculty inside Kathmandu city.

1.15. Data Gathering Procedure

The data are collected from the management students of Kathmandu city. After reviewing
the literature, questionnaire is prepared and sent to the targeted sample through email

17
address. They are requested and provided with adequate instructions to fill the
questionnaire. And the responses are recorded electronically.

1.16 Data Analysis Procedure

The responses received from the samples are entered into SPSS software for further
analysis. To analyse the demographic characteristics and brand preference of youngsters,
frequency distribution is used. Descriptive statistics is used to study the perception of
respondents towards variables of investment decision. The correlation analysis is done to
analyse the relationship between independent and dependent variables. ANOVA analysis is
used between two or more categorical groups testing for differences of means using
variance.

1.17. Methods of Analysis

The following methods are used to analyse the data collected through questionnaire:

Descriptive Statistics:

1. Mean
∑x
Mean =
n
2. Standard Deviation

σ=
√ ∑ (x−µ) ²
N

σ = population standard deviation

μ = the population mean

N=¿ the size of the population
x=¿ each value from the population

3. Correlation coefficient
n ( ∑ xy ) −(∑ x )( ∑ y)
r=
√¿ ¿ ¿

x= each value from the first population

y= each value from the second population
18
 r= Correlation coefficient

Along with the descriptive statistics, the statistical software will also be used. Statistical
Package for Social Science (SPSS) will be used to analyse the data collected.

CHAPTER II

2. Data Presentation and Analysis

2.1. Respondent Profile

The profile of the respondents of questionnaire on investment perception of students
towards stock market is analysed based on age, educational qualification, specialization
area, tenure of investment. The frequencies and percentages were calculated for each
variable. The respondent profiles of the respondents are shown below:

Table 1 Frequency Distribution and Percentage Table

Age Frequency Percent

20-25 216 87.10
Above 25 32 12.9
Total 248 100.0

Qualification Frequency Percent

Postgraduate 81 32.66
Undergraduate 167 67.34
Total 248 100.0

Specialization Frequency Percent

Finance 198 79.84
Marketing 50 20.16

Total 248 100.0

Sources: Survey questionnaire, 2022

The above table shows that 87.10% of respondents comprises the age group of 20-25 and
12.9% of the respondents lie in the age group of above 25. The age group of 20-25 has the

19
largest number of respondents i.e., 216and remaining 32 respondents are above 25 years of
age.

The above table also highlights that 32.66% of the respondents are postgraduate and
67.34% are undergraduate. The number of undergraduate students investing in the stock
market is more i.e., 167 out of sample of 248 students are undergraduate.

Similarly, as shown in table 3, 79.84% of the respondents have specialization in Finance

and 20.16% are specialized in marketing.

2.2Investment Perception
The investment behaviour and preference of the students in the Kathmandu city are
analysed on the basis of type of investment and source of knowledge about the stock
market shown as below:

Table 2
Type of investment Frequency Percent
Long term investment 150 60.49

Short term investment 98 39.51

Total 248 100.0

Source of knowledge Frequency Percent

Parents 25 10.08
Friend or other relatives 52 20.96
Financial Institutions 35 14.11
Media 45 18.14
Educational Institutions 60 24.19
Others 31 12.52
Total 248 100.0
Sources: Survey questionnaire, 2022

The table 2 shows that majority of students Out of 248 respondents it is seen that 60.49%
prefer long term investment and 39.51% of the respondents prefer short term investments.
This accounts that 150 students prefer long term investment and 98 students prefer short

20
term investment out of 24 students. Thus, table 4 shows that most of the students prefer
long term investment.

Similarly, as shown in the table the most common source of knowledge about the stock
market is seen to be educational institutions followed by friends or relatives and media.
24.19% of the students came to know about the investment from educational institutions.
Similarly, 20.96% of the respondents first came to know about the investment from their
friends or relative. 18.41% from media and 14.11 % from financial institution .Whereas
10.08% from their parents and 12.52% of the respondents came to know about the
investment from other sources. Thus, the finding depicts that out of 248 students the
largest source of knowledge is educational institution as it accounts for 60 students and
least response is recorded for parents by 25 students respectively.

2.3 Cronbach Alpha Reliability Test

The reliability of data is evaluated through Cronbach’s Alpha. The reliability data obtained
from each variable in research is given below.
Reliability Test
Table 3
Variables No. of items Cronbach's alpha
Financial behavior 5 0.867
Financial Literacy 5 0.743
Past Dividend 5 0.757
Risk Tolerance 5 0.715
Investment perception 5 0.727
Sources: Survey questionnaire, 2022
Since, Cronbach’s Alpha is greater than 0.7 of each variable, data obtained is
reliable.

2.4 Descriptive Analysis

The descriptive analysis can be done by taking mean and standard deviation of the
determinants of the investment perception. Mean and standard deviation of such
determinants are shown as below:

Table 4 Descriptive Statistics of Financial Behavior

21
 N Mean Std. Deviation
FB1 248 3.72 1.639
FB2 248 4.16 1.192
FB3 248 3.70 1.448
FB4 248 3.85 1.533
FB5 248 4.67 1.698
Valid N (listwise) 248
Sources: Survey questionnaire, 2022

The above table 4 shows that respondents have considers their friends suggestion and
ultimately take their investing decision. They usually react immediately to other investors
decision and they are affected by others’ investment preference to take their own
investment decision .They tend to forecast changes in the stock price based on recent stock
market rate. These statements are true because their mean is greater than 3 and the standard
deviation is also low.

Table 5 Descriptive Statistics of Financial Literacy

N Mean Std. Deviation

FL1 248 3.79 1.574
FL2 248 5.50 1.227
FL3 248 2.55 1.646
FL4 248 6.15 .937
FL5 248 4.19 1.999
Valid N (listwise) 248

Sources: Survey questionnaire, 2022

The above table 5 highlights that the respondents have studied about stock market in
management studies. They have also utilized academic knowledge while evaluating any
stock and feel confident in investing because of academic foundation. Financial knowledge
has also encouraged them to invest. These statements are true because their mean is greater
than 3 and the standard deviation is also low.

22
Table 6 Descriptive Statistics of past Dividend

N Mean Std. Deviation

PD1 248 4.91 1.382
PD2 248 5.11 1.188
PD3 248 4.31 1.609
PD4 248 5.11 1.224
PD5 248 3.46 1.664
Valid N (listwise) 248

Sources: Survey questionnaire, 2022

The above table 6 shows that investors want to invest in share to earn dividend similarly,
they prefer high dividend yield than capital gain. Also, there investment decisions are
based on past dividends provided by company. These statements are true because their
mean value is higher than 3. Similarly, the statement that the respondents prefer cash
dividend over stock dividend is not true because its mean is less than 3.

Table 7 Descriptive Statistics of Risk Tolerance

N Mean Std. Deviation

RT1 248 4.46 1.540
RT2 248 5.40 1.439
RT3 248 2.25 1.336
RT4 248 4.98 1.263
RT5 248 4.48 1.353
Valid N (listwise) 248
Sources: Survey questionnaire, 2022

The table 7 highlights that the respondents want to invest in those share which will provide
them high return. They are willing to take risk to earn more profit by utilizing their income
for larger return. They invest in shares that are riskier which provides them profit rather
than investing in safe stocks that provides less profit.

23
Table 8 Descriptive Statistics of Investment perception

N Mean Std. Deviation

IP1 248 4.04 1.473
IP2 248 5.11 .965
IP3 248 5.28 .926
IP4 248 5.68 .948
IP5 248 3.84 1.549
Valid N (listwise) 248
Sources: Survey questionnaire, 2022

As shown by table 8, the students’ perception is highly based on suggestion. The

respondents’ investment is also guided by dividend distribution by company, financial
perception, and financial knowledge. Whereas their investment is not based on suggestion
and stockbroker direction.

Table 9 Summary of Descriptive Statistics of Students’ Investment Perception

FB 248 4.0202 .89411

FL 248 4.4355 .75224
PD 248 4.5815 .66111
RT 248 4.3145 .55305
IP 248 4.7903 .55898
Valid N (listwise) 248
Sources: Survey questionnaire, 2022

The table 9 shows the descriptive analysis of the variables in an aggregate form. Hence the
table highlights that the aggregate mean of financial behaviour, financial literacy, past
dividend, risk tolerance and investment perception is 4.02, 4.43, 4.58, 4.31 and4.79 which
is greater than average mean 3.

So, it can be concluded that past dividend and financial literacy are the most important
factor followed by financial behavior and risk tolerance as they have higher mean values

24
than others. The mean value of these variables greater than is 3 that indicates that it is the
highly perceived factors by students while making investment decision.

Similarly, the standard deviation of the financial behavior, financial literacy, past dividend,
and investment perception is less than 1 which depicts the variations in responses of the
respondents were not high.

2.4 Correlation Analysis

For this study 4 independent variables and 1 dependent variable was used. The
independent variables were financial behavior, financial literacy, past dividend, and risk
tolerance. On the other hand, the dependent variable was investment perception.

Correlation analysis was conducted to find out the relationship between the dependent and
independent variables. The correlation analysis of the determinants affecting students’
investment perception is shown in the following table. The given table reveals the
Pearson’s correlation coefficient between dependent and independent variable

Correlations
FB FL PD RT IP
FB Pearson Correlation 1 .140 *
.315 **
.073 .242**
Sig. (2-tailed) .028 .000 .250 .000
N 248 248 248 248 248
FL Pearson Correlation .140 *
1 .423 **
.116 .321
Sig. (2-tailed) .028 .000 .068 .000
N 248 248 248 248 248
PD Pearson Correlation .315** .423** 1 .303** .301**
Sig. (2-tailed) .000 .000 .000 .000
N 248 248 248 248 248
RT Pearson Correlation .073 .116 .303 **
1 -.087
Sig. (2-tailed) .250 .068 .000 .174
N 248 248 248 248 248
IP Pearson Correlation .242 **
.321 .301 **
-.087 1
Sig. (2-tailed) .000 .000 .000 .174
N 248 248 248 248 248
*. Correlation is significant at the 0.05 level (2-tailed).
25
**. Correlation is significant at the 0.01 level (2-tailed).
Sources: Survey questionnaire, 2022

In correlation, the correlation coefficient below 0.3 means the variables have a weak
correlation. Similarly, if the variables have the correlation coefficient between 0.3 to 0.6,
then it is said to have a moderate correlation. And the variables with the correlation
coefficient between 0.3 to 0.6 is said to have a moderate correlation.

The table 11 shows the Pearson correlation coefficient between the variables taken for the
study in this research. Since the correlation coefficient (r) between all the variables is
positive, it can be concluded that there is positive correlation between the variables i.e.,
change in one variable leads to the change in another variable in a positive direction. From
the above table we can conclude that there exists weak relationship between financial
behavior and investment perception as their correlation coefficient is less than 0.3 .The
correlation coefficient of financial behavior and investment perception is 0.242 which also
indicates weak positive relationship as it is less than 0.3. Similarly, moderate relationship
exists between financial literacy and investment perception with correlation coefficient of
0.321 that lies between 0.30 and 0.60. The correlation coefficient of past dividend and
investment perception is 0.301 which also indicates moderate relationship. Finally, the
relationship between Risk tolerance and investment perception is negative correlation
coefficient of -.087 that lies below 0.

In conclusion, the correlation coefficient between financial behaviour, financial literacy,

past dividend and investment perception is positive. It means there exist positive
relationship between independent variables and investment perception except risk
tolerance as it have negative correlation with investment perception. This study shows
comparatively stronger relationship between past dividends, financial literacy have and
investment perception. The other variable also has positive relation with the dependent
variables i.e., investment perception.

Model Summary

26
 Adjusted R Std. Error of the
Model R R Square Square Estimate
1 .399 a
.159 .146 .51671
a. Predictors: (Constant), RT, FB, FL, PD

R^2 is .146 or 14.6%. This means that the model is predicted by 14.6%. Financial
behavior, financial literacy, past dividend and risk tolerance only explain this by 14.6%.

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 12.298 4 3.074 11.515 .000b
Residual 64.879 243 .267
Total 77.177 247
a. Dependent Variable: IP
b. Predictors: (Constant), RT, FB, FL, PD

Sources: Survey questionnaire, 2022

The ANOVA test shows that the calculated p-value 0.000 which is less than alpha value
0.05. As a result, the independent variable age is significant in explaining the variance in
investment perception of students. The table 12 highlighted that the independent variable
have significant differences on investment perception of the students inside Kathmandu
city

2.5 Testing of Hypothesis

The null hypothesis of the given research is shown and tested as below:

H1: There is significant relationship between financial behavior and investment

perception.

The hypothesis that there exists significant relationship between financial curriculum and
investment perception is correct because p-value in the given correlation matrix is
0.000which is less than 0.05.

H2: There is significant relationship between financial literacy and investment perception.

The hypothesis that there exists significant relationship between subjective norms and
investment perception is correct because p-value in the given correlation matrix is 0.000
which is less than 0.05.

27
H3: There is no significant relationship between risk tolerance and investment perception.

The hypothesis that there is no significant relationship between risk tolerance and
investment perception is correct because p-value in the given correlation matrix is 0.174
which is greater than 0.05

H4: There is significant relationship between past dividend and investment perception.

The hypothesis that there exists significant relationship between past dividend and
investment perception is correct because p-value in the given correlation matrix is 0.000
which is less than 0.05.

In conclusion all the factors i.e. financial behavior, financial literacy, past dividend have
significant relationship with investment perception except risk tolerance.

2.6 Major findings

The major findings from the study have been presented as below in chronological order.
The data was collected from the respondent using structured questionnaire regarding the
factors affecting students’ investment perception towards the stock market. The major
findings from the study are presented as below:

 Among 248 respondents most of the students are from the age group of 20-25 i.e.
87.10%

And 12.9% of the students who invests in the stock market are from the age group above
24.

 Among 248 respondents, 67.34% of the students are undergraduate and remaining
32.66% are postgraduate.
 Among 248 respondents the students who are specialized in finance and marketing are
79.84% and 20.16% respectively.
 Regarding the investment behaviour and preferences of the students the risk tolerance
level of students are different from being risk averse to risk seeking, However, majority
of students are seemed to tolerate moderate amount of risk.
 The research also shows that 60.4% of the students prefer long term investment. It
shows majority of students are inclined towards long term investment.
28
 The majority of the students’ source of knowledge about the stock market is
educational institutions as it solely accounts for 24.19% following parents, friend or
relatives and others.
 The research also shows that financial knowledge has encouraged students to invest in
stock market. Sometimes they are also distracted by the varying opinions of their
friends or relatives.
 Whereas their investment decision is not seemed to be affected by the recommendation
of stockbrokers. At the same time, it is also seen that the past dividend history of the
company and daily reports of stock exchanges also influence student’s investment
perception.
 The research concludes that the financial behavior have positive but weak relationship
with investment perception. Whereas financial literacy and past dividend have positive
and moderate relationship with investment perception.
 The research also concluded that there exists significant relationship between financial
behavior, financial literacy, past dividend. Risk tolerance have no significant
relationship with investment perception.

CHAPTER III

3. Conclusion and Action Implementations

3.1. Conclusion
Various research and studies have been conducted globally to analyse the investment
patterns and investment behaviours of the students. The capital market in Nepal is still in
its infancy. It is empirical to say that after the financial restructuring of Nepal capital
market in developing. Therefore, now days students are also attracted towards stock
market. Students can make more rational decisions in stock market as they have some
academic foundation also regarding investments. So, to address the factors that affect or
guides students in making their investment decisions or shapes their investment perception
this research study has been conducted.

29
The study concludes that all the factor that have been identified as the determinants of
investment perception of students’ have statistically significant relationship with
investment perception. Hence, all identified factors are important factors affecting the
students’ perception towards the stock market. Comparatively, financial literacy, financial
behavior, and past dividend are more important factors affecting investment perception of
students. Risk tolerance have insignificant impact on investment perception of students.

Mailed questionnaires were used to collect data. But there was a problem encountered
when respondents completely neglected the sent questionnaire. The response rate was too
low. Some students did not fill the questionnaire as a result data collection process was
delayed. It took more time to get response from the targeted samples. Therefore, only the
sample of 248 has been taken. In conclusion, low response, omission of questions in
questionnaire and physical constraints were some of the research problems which were
dealt dutifully to reach the findings and the conclusion of the research study.

3.2. Action Implications

This research finding has some practical implications. Through this study the determinants
of student’s investment perception can be known. Financial institutions can know the
factors of investment perception in Kathmandu. It can also benefit by recognizing the
factors that do or do not influence the investment perception of the students and take
corrective measures. Educational institutions can also include necessary topics to make
students more educated in the financial market by helping them make a rational decision.
Even students can analyse their investment decision by knowing what factors are likely to
affect their investment decisions. The students can make comparison between their
investment perception with others. Moreover, this research also provides basis for future
research studies on the same field. It also facilitates on future academic research. The
further research can be undertaken on other investment avenues and other variables can be
taken such as occupation, age, subjective norms, education, etc.

30
3.3 Limitations of the study
This research aims to address the factors affecting the perception of students’ while making
investment decisions in the stock market. It aims to study the behavioural aspect of
investment perception and decision in Kathmandu city by taking the samples from the
students in |Kathmandu city. There are several limitations on this study:

 Research is focused within the students of Kathmandu city only.

 The sample size is restricted to 249 students only. Hence it cannot be generalized for
the entire students.
 Only those students who were active in the market were included in the study.
 The behaviour of the students while making decision will vary depending on market
conditions. So, the investment preferences in the current scenario or trend may not be
same in the future.
 Data are collected only through primary source.
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 ANNEXES

a. Specify your age.

i. Below 19 ii. 19-24 iii. Above 24

b. Level of university studies

i. Undergraduate ii. Post-graduate

c. What is your studied specialization?

i. Finance ii. Marketing

d. What type of investment do you prefer?

i. Long term investment ii. Short term investment

e. From whom did you come to know about stock market at first?
i. Parents
ii. Friend or other relatives
iii. Financial Institutions
iv. Media
v. Educational Institutions
vi. Others……………………………………………………………………….

Questionnaire Design
Questionnaire design for Research on Determinants of Students’ Investment Perception towards
Stock Market

1 2 3 4 5 6 7
SD D SWD N SWA A SA

Questionnaire Statement

1. Financial Behavior (FB)

1 2 3 4 5 6 7
Code Statement SD D SWD N SWA A SA
FB1 I would invest in stock by following my
friends’ recommendation.
FB2 I consult with others ultimately to choose
my own investment.
FB3 I usually react quickly to the changes of
 other investors’ decisions and follow their
reaction to the stock market.
FB4 Others investors’ decisions of choosing
stock types/ volumes have impact on your
investment decisions.
FB5 I forecast the changes in stock prices in the
future based on the recent stock price.

2 .Financial Literacy (FL)

1 2 3 4 5 6 7
Code Statement SD D SWD N SWA A SA
FL1 Time deposit investing offers high return
than stock.
FL2 Investing in stocks offers higher returns
than bond.
FL3 If the company incurs a loss, will the
company distribute dividends to investors.
FL4 Bond have a maturity.
FL5 Shareholders have right to share the
company’s assets if the company goes
bankrupt.

3. Past Dividend (PD)

1 2 3 4 5 6 7
Code Statement SD D SWD N SWA A SA
PD1 I want to invest in shares to earn
dividend.
PD2 My investment activities are based on
past dividend provided by company.
PD3 I prefer higher dividend yield than
capital yield.
PD4 My investment are affected by dividend
payout ratio.
PD5 I prefer cash dividend over the stock
dividend.

4. Risk Tolerance (RT)

1 2 3 4 5 6 7
Code Statement SD D SWD N SWA A SA
RT1 I will use income/money to invest
speculative stocks.
RT2 I will invest in some investment are safe
but not earn high return.
RT3 Invest in shares without considering.I will
hold my shares until it provides high return.
RT4 The selected stock investment is an
 investment that provides a large return.
RT5 I will hold my shares until it provides high
return.

5. Investment perception (IP)

1 2 3 4 5 6 7
Code Statement SD D SWD N SWA A SA
IP1 My investment perception is highly
based on suggestion.
IP2 My investment is guided by dividend
distribution by company.

IP3 Investment is based on my financial

prediction.

IP4 Investment is based on my financial

knowledge.

IP5 My investment is guided by

stockbroker’s direction.