Master of Business Administration Executive

Faculty / School

Faculty of Business Administration (FBA)

Year of Award


Project Type

MBA Executive Research Project

Access Type

Restricted Access

Executive Summary

stock market participation in Pakistan is very low as a mere 2.2 investors for every 1000 people invest in the stock market as compared to 17.8 in India, 18.6 in Bangladesh and 27.8 in Sri Lanka. In order understand the reasons behind low stock market participation in Pakistan, secondary research was conducted to identify factors that determine stock market participation globally. Subsequently, a survey was conducted to test the applicability of these factors on Pakistan.

A fundamental issue uncovered by the Primary Research was a disproportionately large impact of lack of awareness and understanding of stock market. 45% of the non investors mentioned that their likelihood of investing in stock market would improve if they are able to understand the stock market better.

Survey results showed a very low general level of trust in Pakistan which is an important factor behind low stock market participation. Pakistanis also have a very low level of trust on the stock markets, financial advisors and the legal system as a protector of investor's rights. Trust was very low even amongst the investors. All these constitute major factors behind low stock market participation in Pakistan. However, Pakistanis do not view the stock market as a gambling den.

Most of the respondents who viewed the stock market as a gambling den were non investors which that a very negative perception of the stock market reduces an investor's likelihood to invest in the stock market. However, individual level trust on stock market and legal system was not found to be a decisive factor in determining whether a person invests in the stock market or not. Trust on the financial advisor was found to be somewhat linked to investing however, results were not statistically significant.

As indicated by secondary research, the survey discovered some linkage between sociability and stock market participation, but the results were not statistically significant. Survey also showed that having a friend / relative who is already an investor in the stock market increases an individual's likelihood to invest, however, the results were again not statistically significant for this factor. Results were also not statistically significant for the hypothesis that sociable people are more likely to receive investment advice through word-of-mouth information sharing, however, results showed some linkage.

The survey found that investors like talking about their stock market investments with friends which indicates importance of references and word of mouth as the most important marketing medium for stock markets in general and brokerage houses in particular.



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