Impact of Financial Literacy on Stock Market Participation

Abstract

This research has studied the importance of financial literacy in stock exchange participation. This study shows that, how financial knowledge help the stock participants in their decision. Do they earn more return than financially illiterate investors? Those who are not financially literate what kind of difficulties they face. In this research, the researcher took two independent variables (financial literacy, substitute market) and compare them with the stock exchange participation. Regression analysis has been used to examine the relation of a dependent variable to specified independent variables. The research instruments used in this study are questionnaire. Our questionnaire is based on the age group, income level, educational level, and business level of the individual participant in stock exchange. Then we conclude on the basis of our respondents, whether financial literacy has any impact on the stock exchange participation or not. To find out the result we use EViews software, and calculate the result by using prob. (normal curve distribution) techniques. The use of prob. show that either our hypothesis is accepted or rejected. T-test, R-squared, S.E. of regression, Durbin-Watson stat, and prob. Technique are applied in this study. But the basic conclusions have been drawn through prob. (normal curve distribution). On the basis of the results conclude that the financial literacy has no such impact on the participation of stock exchange.