Factors Affecting Investment Decisions: A Study on Bangladesh Stock Market

Surajit Sarbabidya and Trina Saha

Stock market is one of the attractive places for investment among the investors of Bangladesh. There are two stock exchanges namely Dhaka stock exchange (DSE) and Chittagong stock exchange (CSE). People invest their money in both primary and secondary market(s) for the purpose of gaining profit. But the investment situation was not good in Bangladeshi market in the recent past. The investors witnessed two severe stock market crashes in Bangladesh in the years 1996 and 2010. Since then investors encountered much frustration due to gambling, syndication, insider trading, enactment of many laws and their short term and sudden but adverse effect, fluctuating and volatile market conditions, rumor, etc., in freely investing their hard money in this market. This has negatively impacted the natural and stable growth of investment in this market. The main objective of the study is to examine the factors affecting investment decisions in the stock market from the perspectives of Bangladesh. The present study is the result of the collection of both primary and secondary data and their analyses of which the primary data have been collected from the sample size of 100 respondents using ‘random sampling’ method through survey on investors of brokerage houses in Chittagong and Comilla. A structured self-administered questionnaire comprising of closed (i.e., dichotomous – yes/no), open-ended, non-forced, balanced and odd numbered noncomparative itemized questions using Likert 5 rating scale of measurement has been used for the survey. On the other hand, secondary data have been collected through extensive literature review. In this regard, recent articles and research papers published in the referred journals and peer reviewed international conference proceedings, survey reports, internship reports, annual reports and sustainability reports of the operators, web sites, newspapers, etc., relevant to the literature of the subject matter have also been studied. The study found relationship between the factors and investment decisions. The factors including risk factors, stockholder’s whimsical attitude, earning per share, political instability, uncontrollable macroeconomic factors, etc. have been found damaging and demotivating the investors of the stock market in Bangladesh unless effective measures will be taken to correct the same.