Financial Literacy and Its Relation to Stock Market Participation by Students

Abstract

Pakistan has an enormous population of university students. Every year, university students graduate and start their hunt for jobs. However, this is not the only time they look for opportunities to earn money. They often resort to minimum paying freelance jobs to make extra money to help them with their expenses. Pakistan stock exchange is one of the opportunities with the most potential to turn into a profitable career. Most students either do not know about the operations of the stock market or are too reluctant to participate as traders or investors because of severe misconceptions about the stock market and a lack of awareness and trust from an educational point of view. The aim of this study was to identify whether students in Pakistan possessed an understanding of the financial institutions and investment related matters. Through a process of primary research targeted towards university students of the Lahore area and an account of existing literature, the study aimed to find how these students' financial knowledge relates to their potential stock market participation. Finding this out would help identify the underlying factors that can be improved to encourage students' participation in the stock market. And to find out if certain steps can be taken to encourage the behavior of students towards stock markets.