Factors Influencing Individual Investors’ Investment in Capital Market: Case for a Brokerage House in Bangladesh

Abstract

The main objective of this study was to develop a framework about behavioral aspects of individual investors for investment in the stock market of Bangladesh. A structured questionnaire was used to collect the data necessary to find out the most influential factors. In the field of general information, it’s found that peoples had significant years of experience. Majority of the population came in the market on their self-interest. People invested in the market to increase their capital. Most of the investors were small size in capital. Majority of the respondents were willing to buy in the bearish market. They had collected information from multiple sources. In the field of firm’s image, it’s observed that reputation of the firm, firm’s status, feelings for a firm’s product and services, feeling on the economy influence investor’s decision. Investors were also somewhat influenced by firm’s ethical operations. Investor’s decision was significantly influenced by the firm’s accounting information like price of the share, EPS, financial statement, DPS, expected dividend, past performance etc. A notable percentage of investors were regularly reading the articles published in the daily newspaper, collected information from internet, TV talk show. Money market conditions also influenced investor’s decision. Individual investor’s decisions were strongly affected by advice of brokers but friends and familymember’s advices didn’t seem to have such influence. In personal financial need factors only need diversification could be seen having a minor influence the rest having very little or no influence.