Limited Stock Investments in Pakistan

It has been observed that people are less prone to invest in the stock markets and this effect is more prominent in developing countries like Pakistan. It’s a common observation that people in Pakistan are more reluctant to buy the stocks of companies rather they think that it’s better to invest in the real estate, start a business, deposit in bank saving accounts, or to buy gold. The purpose of conducting this study is to find the reasons behind this discouraged stockholdings in general public. A huge amount of literature had been reviewed to get a clear view of this issue in different countries and a questionnaire had been designed to get primary data from the local respondents to know their views about this limited stockholdings. It has been found that many demographic characteristics like age, gender, occupation, education and income have impact on the stockholdings. Awareness, financial literacy, social interaction, informational cost, participation cost and entry cost have also found to have an impact on the proportion of stockholdings. It is clear from the analysis that 65% of the respondents have never bought stocks. Several reasons have been highlighted for this limited stockholdings pattern among the individuals such as no money, lack of awareness and information about stock markets or investment in any other form.