To Invest or Not to Invest? Determinants of Low Stock Market Participation: Qualitative Perspective from Pakistan Stock Exchange

Muhammad Naveed, Muzammal Ilyas Sindhu, Shoaib Ali and Wing-Keung Wong
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Muhammad Naveed: Department of Management Sciences, University of South Asia, Lahore, Pakistan
Muzammal Ilyas Sindhu: Department of Management Studies, Bahria University, Pakistan
Wing-Keung Wong: Department of Finance, Fintech & Blockchain Research Center, and Big Data Research Center, Asia University, Taiwan

Advances in Decision Sciences, 2023, vol. 27, issue 1, 113-171

Abstract: [Purpose] This research endeavors to explore the factors that deter households in Pakistan from investing in the stock market. The contextual setting of the study will be provided by the households of Pakistan. [Design/methodology/approach] The methodology employed in this study is qualitative in nature, utilizing techniques such as in-depth interviews designed to capture rich and nuanced insights from participants. The research employed a qualitative approach by conducting open-ended unstructured interviews to investigate and provide new perspectives on this issue of low household participation in the Pakistan stock market. [Findings] Through qualitative investigation, the study found that the major factors influencing households’ willingness to invest in stocks include uncertainty, lack of trust, limited financial knowledge, risk, complicated process, information transparency issues, non-Islamic views about stock investment, and taxation issues. [Practical Implications] The study's findings have practical implications for regulators and firms listed on the Pakistan Stock Exchange. The identified reasons for low stock market participation can be addressed through initiatives such as improving information transparency, simplifying the investment process, and providing financial education to households to encourage their participation in the stock market. [Originality/value] This study offers novel insight into the reasons behind household participation in the Pakistan stock market, which has practical implications for stakeholders in the financial market. The utilization of open-ended unstructured interviews provided a unique approach to exploring this emerging phenomenon.

Keywords: PSX; Stock market participation; Uncertainty; Risk; Households. (search for similar items in EconPapers)
JEL-codes: G1 G2 G5 G51 G53 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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