Factors Affecting Investment Decisions: A Study on Bangladesh Stock Market

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.

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