A Study of Factors investors consider while making fundamental analysis of shares of commercial banks in Nepal

Submitted By Sandarva Pal

A Graduate Research Report Submitted to Ace Institute of Management Pokhara University

Submitted for the degree of Master of Business Administration

Kathmandu December, 2012

Acknowledgement

I am very grateful and genuinely thankful to all who helped me in my endeavor to completing my research as well as production of this thesis. I would like to appreciate the support from my classmates. I am also thankful to brokerage firms which I visited during my survey. In a special way, I am sincerely grateful to Mr. Sohan Babu Khatri, my thesis guide, for providing me with tremendous guidance which proved to be invaluable in ensuring that this research journey came to a triumphant end.

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Certificate of Authorship

I hereby declare that this submission is my own work and that, to the best of my knowledge and belief, it contains no material previously published or written by another person nor material which to a substantial extent has been accepted for the award of any other degree of a university or other institution of higher learning, expect where due acknowledgements. Sandarva Pal

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Approval Sheet

Recommendation for Approval This GRP report prepared and submitted by Sandarva Pal in partial fulfillment of the requirements for the degree of Master of Business Administration has been supervised by me and recommend it for acceptance.

Sohan Babu Khatri Date:

Acceptance of the External Examiner I approve the GRP submitted by Sandarva Pal. The grade sheet has been submitted to the Dean, School of Business, Pokhara University through the college on a separate evaluation sheet.

Name and Signature of the External Examiner Date Viva Examination The candidate has successfully defended the GRP. We recommend it for acceptance. The grade sheet has been submitted to the Dean, Pokhara University through the college on a separate evaluation sheet.

External Examiner GRP Adviser Other members Date

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Table of Contents
Chapter 1 ............................................................................................................................................... 1 Introduction ........................................................................................................................................... 1 1.1 Background of the Study .......................................................................................................... 1 1.2 Statement of the Problem ............................................................................................................ 3 1.3 Purpose of the Study ................................................................................................................... 4 1.4 1.5 Significance of the Study .................................................................................................... 4 Research Hypotheses .......................................................................................................... 5

1.6 Operational Definitions and Assumptions .................................................................................. 6 1.7 Organization of the Study ......................................................................................................... 12 1.8 Limitations of the study ............................................................................................................ 13 Chapter 2 ............................................................................................................................................. 14 Literature Review and Theoretical Framework .................................................................................. 14 2.1 Literature Review...................................................................................................................... 14 2.2 Theoretical Framework ......................................................................................................... 21 Chapter 3 ............................................................................................................................................. 30 Research Methodology ....................................................................................................................... 30 3.1 Research Plan and Design ......................................................................................................... 30 3.2 Description of the Sample and Sampling technique ................................................................. 31 3.3 Instrumentation ......................................................................................................................... 32 3.4 Method of Analysis ................................................................................................................... 33 3.5 Data Collection Procedure and Time Frame ............................................................................. 33 3.6 Validity and Reliability ............................................................................................................. 34 3.7 Overall Analysis Plan ............................................................................................................... 35 Chapter 4 ............................................................................................................................................. 36 Results and Discussion ....................................................................................................................... 36 4.1 Presentation of Results and Descriptive Analysis..................................................................... 36 4.1.1 Demographic Factors Analysis .......................................................................................... 36 4.1.2 General information analysis ............................................................................................. 38 4.2 Types of Statistical Tests Performed ........................................................................................ 40 v

4.3 Inferential Analysis and Discussion .......................................................................................... 43 4.3.1 Cross tabulation Analysis .................................................................................................. 43 4.3.1.1 Cross tabulation between Age group of investors and Ideology of political party in government factor considered ..................................................................................................... 43 4.3.1.2 Cross tabulation between Age group of investors and Impact of regulation & policies factor considered ......................................................................................................................... 44 4.3.1.3 Cross tabulation between Age group of investors and Corporate governance factor considered ................................................................................................................................... 45 4.3.1.4 Cross tabulation between Age group of investors and Liquidity position factor considered ................................................................................................................................... 46 4.3.1.5 Cross tabulation between Age group of investors and Capital adequacy factor considered .................................................................................................................................................... 46 4.3.1.6 Cross tabulation between Age group of investors and Earning per share factor considered ................................................................................................................................... 47 4.3.1.7 Cross tabulation between Age group of investors and Interest spread factor considered48 4.3.1.8 Cross tabulation between Age group of investors and Cost of fund factor considered .. 49 4.3.1.9 Cross tabulation between Age group of investors and Profitability factor considered ... 50 4.3.1.10 Cross tabulation between Age group of investors and Loan portfolio size factor considered ................................................................................................................................... 51 4.3.1.11 Cross tabulation between Age group of investors and Loan loss provision factor considered ................................................................................................................................... 52 4.3.1.12 Cross tabulation between Age group of investors and Dividend history factor considered ................................................................................................................................... 53 4.3.1.13 Cross tabulation between Age group of investors and Size of deposit factor considered .................................................................................................................................................... 54 4.3.1.14 Cross tabulation between Age group of investors and Non-performing loan factor considered ................................................................................................................................... 55 4.3.1.15 Cross tabulation between Age group of investors and Number of branches factor considered ................................................................................................................................... 56 4.3.1.16 Cross tabulation between Age group of investors and Management team factor considered ................................................................................................................................... 57 4.3.1.17 Cross tabulation between Age group of investors and Directors in Board factor considered ................................................................................................................................... 58 4.3.1.19 Cross tabulation between Age group of investors and Years of operation factor considered ................................................................................................................................... 60 4.3.1.20 Cross tabulation between Education Level of investors and Ideology of political party in government factor considered ................................................................................................. 61 vi

4.3.1.21Cross tabulation between Education Level of investors and Impact of regulation & policies factor considered ........................................................................................................... 62 4.3.1.22 Cross tabulation between Education Level of investors and Corporate governance factor considered ......................................................................................................................... 63 4.3.1.23 Cross tabulation between Education Level of investors and Liquidity position factor considered ................................................................................................................................... 64 4.3.1.24 Cross tabulation between Education Level of investors and Capital adequacy factor considered ................................................................................................................................... 65 4.3.1.25 Cross tabulation between Education Level of investors and Earning per share factor considered ................................................................................................................................... 66 4.3.1.26 Cross tabulation between Education Level of investors and Interest spread factor considered ................................................................................................................................... 67 4.3.1.27 Cross tabulation between Education Level of investors and Cost of fund factor considered for fundamental analysis of shares of commercial banks ......................................... 68 4.3.1.28 Cross tabulation between Education Level of investors and Profitability factor considered ................................................................................................................................... 69 4.3.1.29 Cross tabulation between Education Level of investors and Loan portfolio size factor considered ................................................................................................................................... 70 4.3.1.30 Cross tabulation between Education Level of investors and Loan loss provision factor considered ................................................................................................................................... 71 4.3.1.31 Cross tabulation between Education Level of investors and Dividend history factor considered ................................................................................................................................... 72 4.3.1.32 Cross tabulation between Education Level of investors and Size of deposit factor considered ................................................................................................................................... 73 4.3.1.33 Cross tabulation between Education Level of investors and Non-performing loan factor considered ................................................................................................................................... 74 4.3.1.34 Cross tabulation between Education Level of investors and Number of branches factor considered ................................................................................................................................... 75 4.3.1.35 Cross tabulation between Education Level of investors and Management team factor considered ................................................................................................................................... 76 4.3.1.36 Cross tabulation between Education Level of investors and Directors in Board factor considered ................................................................................................................................... 77 4.3.1.37 Cross tabulation between Education Level of investors and Overall image of bank/brand name factor considered ............................................................................................ 78 4.3.1.38 Cross tabulation between Education Level of investors and years of operation factor considered ................................................................................................................................... 79 4.3.2 Intra-Industry/Company factor analysis............................................................................. 80 vii

4.3.2.1 Intra-industry factor ranking by different age group of investors when market is bearish .................................................................................................................................................... 80 4.3.2.2Intra-company factor ranking by different age group of investors when market is bullish .................................................................................................................................................... 81 4.3.2.3 Intra-company factor ranking by different income level investors when market is bearish .................................................................................................................................................... 83 4.3.3ANOVA test........................................................................................................................ 84 4.3.4 Chi-square test ................................................................................................................. 102 4.3.4.1 Test of significant association between age group of investors and their consideration of ideology of political party in government as a factor for fundamental analysis of shares of commercial banks ..................................................................................................................... 102 4.3.4.2 Test of significance association between age group of investors and their consideration of liquidity position as a factor for fundamental analysis of shares of commercial banks ....... 102 4.3.4.3 Test of significant association between age group of investors and their consideration of profitability as a factor for fundamental analysis of shares of commercial banks .................... 103 4.3.4.4 Test of significant association between age group of investors and their consideration of management team as a factor for fundamental analysis of shares of commercial banks .......... 104 4.3.4.5 Test of significant association between education level of investors and their consideration of ideology of political party in government as a factor for fundamental analysis of shares of commercial banks .................................................................................................. 104 4.3.4.6 Test of significant association between education level of investors and their consideration given to liquidity position as a factor for fundamental analysis of shares of commercial banks ..................................................................................................................... 105 4.3.4.7 Test of significant association between education level of investors and their consideration given to profitability as a factor for fundamental analysis of shares of commercial banks ......................................................................................................................................... 106 4.3.4.8 Test of significant association between education level of investors and their consideration given to management team as a factor for fundamental analysis of shares of commercial banks ..................................................................................................................... 106 4.3.4.9 Test of significant association between income level of investors and their consideration given to ideology of political party in government as a factor for fundamental analysis of shares of commercial banks ................................................................................................................. 107 4.3.4.10 Test of significant association between income level of investors and their consideration given to liquidity position as a factor for fundamental analysis of shares of commercial banks ..................................................................................................................... 108 4.3.4.11 Test of significant association between income level of investors and their consideration given to profitability as a factor for fundamental analysis of shares of commercial banks ......................................................................................................................................... 108 viii

4.3.4.12 Test of significant association between income level of investors and their consideration given to management team as a factor for fundamental analysis of shares of commercial banks ..................................................................................................................... 109 Chapter 5 ........................................................................................................................................... 110 Summary and Conclusions ............................................................................................................... 110 5.1 Summary of findings............................................................................................................... 110 5.2 Conclusions ............................................................................................................................. 116 5.3 Recommendations ............................................................................................................... 117 Bibliography ...................................................................................................................................... 119

List of Tables
Table 1: Frequency distribution based on age group of respondents .................................................. 36 Table 2: Frequency distribution based on education level of respondents ......................................... 36 Table 3: Frequency distribution based on profession of respondents ................................................. 37 Table 4: Frequency distribution based on average monthly income of respondents .......................... 37 Table 5: Frequency distribution based on investment horizon of respondents ................................... 38 Table 6: Frequency distribution based on response to research report published by individuals and institutions........................................................................................................................................... 38 Table 7: Frequency distribution based on response to recommendations/suggestions from brokers . 39 Table 8: Frequency distribution based on response to investment management service providers .... 39 Table 9: Frequency distribution based on response to self- research.................................................. 39 Table 10: Frequency distribution based on response to research web sites ........................................ 39 Table 11: Frequency distribution based on response to news papers ................................................. 40 Table 12: Frequency distribution based on response to tips from relatives/friends ............................ 40 Table 13: Cross tabulation between Age group of investors and Ideology of political party in government factor considered while making fundamental analysis of shares of commercial banks.. 43 Table 14: Cross tabulation between Age group of investors and Impact of regulation & policies factor considered while making fundamental analysis of shares of commercial banks ...................... 44 Table 15: Cross tabulation between Age group of investors and Corporate governance factor considered while making fundamental analysis of shares of commercial banks ................................ 45 Table 16: Cross tabulation between Age group of investors and Liquidity position factor considered while making fundamental analysis of shares of commercial banks .................................................. 46 ix

Table 17: Cross tabulation between Age group of investors and Capital adequacy factor considered while making fundamental analysis of shares of commercial banks .................................................. 46 Table 18: Cross tabulation between Age group of investors and Earning per share factor considered while making fundamental analysis of shares of commercial banks .................................................. 47 Table 19: Cross tabulation between Age group of investors and Interest spread factor considered while making fundamental analysis of shares of commercial banks .................................................. 48 Table 20: Cross tabulation between Age group of investors and Cost of fund factor considered while making fundamental analysis of shares of commercial banks ............................................................ 49 Table 21: Cross tabulation between Age group of investors and Profitability factor considered while making fundamental analysis of shares of commercial banks ............................................................ 50 Table 22: Cross tabulation between Age group of investors and Loan portfolio size factor considered while making fundamental analysis of shares of commercial banks .................................................. 51 Table 23: Cross tabulation between Age group of investors and Loan loss provision factor considered while making fundamental analysis of shares of commercial banks ................................ 52 Table 24: Cross tabulation between Age group of investors and Dividend history factor considered while making fundamental analysis of shares of commercial banks .................................................. 53 Table 25: Cross tabulation between Age group of investors and Size of deposit factor considered while making fundamental analysis of shares of commercial banks .................................................. 54 Table 26: Cross tabulation between Age group of investors and Non-performing loan factor considered while making fundamental analysis of shares of commercial banks ................................ 55 Table 27: Cross tabulation between Age group of investors and Number of branches factor considered while making fundamental analysis of shares of commercial banks ................................ 56 Table 28: Cross tabulation between Age group of investors and Management team factor considered while making fundamental analysis of share commercial banks ........................................................ 57 Table 29: Cross tabulation between Age group of investors and Directors in Board factor considered while making fundamental analysis of shares of commercial banks .................................................. 58 Table 30: Cross tabulation between Age group of investors and Overall image of bank/brand name factor considered while making fundamental analysis of shares of commercial banks ...................... 59 Table 31: Cross tabulation between Age group of investors and Years of operation factor considered while making fundamental analysis of shares of commercial banks .................................................. 60 Table 32: Cross tabulation between Education Level of investors and Ideology of political party in government factor considered while making fundamental analysis of shares of commercial banks.. 61

Table 33: Cross tabulation between Education Level of investors and Impact of regulation & policies factor considered while making fundamental analysis of shares of commercial banks ...................... 62 Table 34: Cross tabulation between Education Level of investors and Corporate governance factor considered while making fundamental analysis of shares of commercial banks ................................ 63 Table 35: Cross tabulation between Education Level of investors and Liquidity position factor considered while making fundamental analysis of shares of commercial banks ................................ 64 Table 36: Cross tabulation between Education Level of investors and Capital adequacy factor considered while making fundamental analysis of shares of commercial banks ................................ 65 Table 37: Cross tabulation between Education Level of investors and Earning per share factor considered while making fundamental analysis of shares of commercial banks ................................ 66 Table 38: Cross tabulation between Education Level of investors and Interest spread factor considered while making fundamental analysis of shares of commercial banks ................................ 67 Table 39: Cross tabulation between Education Level of investors and Cost of fund factor considered while making fundamental analysis of shares of commercial banks .................................................. 68 Table 40: Cross tabulation between Education Level of investors and Profitability factor considered while making fundamental analysis of shares of commercial banks .................................................. 69 Table 41: Cross tabulation between Education Level of investors and Loan portfolio size factor considered while making fundamental analysis of shares of commercial banks ................................ 70 Table 42: Cross tabulation between Education Level of investors and Loan loss provision factor considered while making fundamental analysis of shares of commercial banks ................................ 71 Table 43: Cross tabulation between Education Level of investors and Dividend history factor considered while making fundamental analysis of shares of commercial banks ................................ 72 Table 44: Cross tabulation between Education Level of investors and Size of deposit factor considered while making fundamental analysis of shares of commercial banks ................................ 73 Table 45: Cross tabulation between Education Level of investors and Non-performing loan factor considered while making fundamental analysis of shares of commercial banks ................................ 74 Table 46: Cross tabulation between Education Level of investors and Number of branches factor considered while making fundamental analysis of shares of commercial banks ................................ 75 Table 47: Cross tabulation between Education Level of investors and Management team factor considered while making fundamental analysis of shares of commercial banks ................................ 76 Table 48: Cross tabulation between Education Level of investors and Directors in Board factor considered while making fundamental analysis of shares of commercial banks ................................ 77

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Table 49: Cross tabulation between Education Level of investors and Overall image of bank/brand name factor considered while making fundamental analysis of shares of commercial banks ............ 78 Table 50: Cross tabulation between Education Level of investors and Years of operation factor considered while making fundamental analysis of shares of commercial banks ................................ 79 Table 51: Intra-industry factor ranking by different age group of investors when market is bearish . 80 Table 52: Intra-company factor ranking by different age group of investors when market is bullish 81 Table 53: Intra-company factor ranking by different income level investors when market is bearish83 Table 54: Anova test for difference in the mean consideration given to industry factors between different age group of investors with long investment horizon .......................................................... 85 Table 55: Anova test for difference in the mean consideration given to industry factors between different age group of investors with short investment horizon ......................................................... 85 Table 56: Anova test for difference in the mean consideration given to industry factors between different age group of investors when market is bullish ..................................................................... 86 Table 57: Anova test for difference in the mean consideration given to industry factors between different age group of investors when market is bearish .................................................................... 87 Table 58: Anova test for difference in the mean consideration given to company factors between different age group of investors with long investment horizon .......................................................... 87 Table 59: Anova test for difference in the mean consideration given to company factors between different age group of investors with short investment horizon ......................................................... 88 Table 60: Anova test for difference in the mean consideration given to company factors between different age group of investors when market is bullish ..................................................................... 89 Table 61: Anova test for difference in the mean consideration given to company factors between different age group of investors when market is bearish .................................................................... 89 Table 62: Anova test for difference in the mean consideration given to industry factors between different education level investors with long investment horizon ...................................................... 90 Table 63: Anova test for difference in the mean consideration given to industry factors between different education level investors with short investment horizon ..................................................... 91 Table 64: Anova test for difference in the mean consideration given to industry factors between different education level investors when market is bullish ................................................................. 91 Table 65: Anova test for difference in the mean consideration given to industry factors between different education level investors when market is bearish ................................................................ 92 Table 66: Anova test for difference in the mean consideration given to company factors between different education level investors with long investment horizon ...................................................... 93 xii

Table 67: Anova test for difference in the mean consideration given to company factors between different education level investors with short investment horizon ..................................................... 94 Table 68: Anova test for difference in the mean consideration given to company factors between different education level investors when market is bullish ................................................................. 94 Table 69: Anova test for difference in the mean consideration given to company factors between different education level investors when market is bearish ................................................................ 95 Table 70: Anova test for difference in the mean consideration given to industry factors between different income level investors with long investment horizon .......................................................... 96 Table 71: Anova test for difference in the mean consideration given to industry factors between different income level investors with short investment horizon ......................................................... 97 Table 72: Anova test for difference in the mean consideration given to industry factors between different income level investors when market is bullish ..................................................................... 98 Table 73: Anova test for difference in the mean consideration given to industry factors between different income level investors when market is bearish .................................................................... 98 Table 74: Anova test for difference in the mean consideration given to company factors between different income level investors with long investment horizon .......................................................... 99 Table 75: Anova test for difference in the mean consideration given to company factors between different income level investors with short investment horizon ....................................................... 100 Table 76: Anova test for difference in the mean consideration given to company factors between different income level investors when market is bullish ................................................................... 100 Table 77: Anova test for difference in the mean consideration given to company factors between different income level investors when market is bearish .................................................................. 101 Table 78: Chi-square test between age group of investors and their consideration of ideology of political party in government factor while making fundamental analysis of shares of commercial banks ................................................................................................................................................. 102 Table 79: Chi-square test between age group of investors and their consideration of liquidity position factor while making fundamental analysis of shares of commercial banks ...................................... 103 Table 80: Chi-square test between age group of investors and their consideration of profitability factor while making fundamental analysis of shares of commercial banks ...................................... 103 Table 81: Chi-square test between age group of investors and their consideration of management team factor while making fundamental analysis of shares of commercial banks ............................. 104 Table 82: Chi-square test between education level of investors and their consideration of ideology of political party in government factor while making fundamental analysis of shares of commercial banks ................................................................................................................................................. 105 xiii

Table 83: Chi-square test between education level of investors and liquidity position factor considered while making fundamental analysis of shares of commercial banks .............................. 105 Table 84: Chi-square test between education level of investors and their consideration of profitability factor while making fundamental analysis of shares of commercial banks ...................................... 106 Table 85: Chi-square test between education level of investors and management team factor considered while making fundamental analysis of shares of commercial banks .............................. 107 Table 86: Chi-square test between income level of investors and their consideration of ideology of political party in government factor while making fundamental analysis of shares of commercial banks ................................................................................................................................................. 107 Table 87: Chi-square test between income level of investors and their consideration of liquidity position factor while making fundamental analysis of shares of commercial banks ........................ 108 Table 88: Chi-square test between income level of investors and their consideration of profitability factor while making fundamental analysis of shares of commercial banks ...................................... 109 Table 89: Chi-square test between income level of investors and their consideration of management team factor while making fundamental analysis of shares of commercial banks ............................. 109

List of Figure
Figure 1: Theoretical Framework ....................................................................................................... 21

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Executive Summary

Fundamental analysis is a major technique to correctly estimate the price of a share of any bank and financial institution. Investors have been using fundamental analysis along with technical to predict the price of share. The choice of fundamental factor for calculating the stock price depends on age, education and other demographic variables of investor. Numerous studies have shown that with age (or experience) and education comes the ability to segregate relevant and important economy, industry and company factors. This study was an endeavor to get insight into what key fundamental factors investors think is most important for investing in shares of commercial banks. Which factors they consider is most valuable for calculating and predicting the share price of commercial bank. For this purpose 120 samples was chosen taking 30 samples for each sub-variable under education level variable. Small pilot study was undertaken to identify fundamental factors where only industry and company factors identified as important. Accordingly, a survey questionnaire was developed by dividing factors under industry and company factors. Investors rated the factors in five rating scale. The purpose of the study is to identify which fundamental factors are important to share traders of commercial bank with long and short investment horizon and under bullish and bearish market trend. And test relationship between demographic variable of respondents and factors considered by them. Investors have been divided into five categories. Here, only age, education and income level variables are taken into account for this study purpose. Fundamental Share prices are the most important indicator readily available to the investors for their decision to invest or not in a particular share. Theories suggest that share price changes is associated with changes in fundamental variables which are relevant for share valuation like payout ratio, dividend yield, capital structure, earnings size of the firm and its growth. In effect in investors are always mindful of the macroeconomic and microeconomic variables in analyzing investment in stock as they effect the performance of and turnover of banks, return of investors by way of dividend

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This study also tests whether factors like ideology of political party in government, liquidity position; profitability and management team as factors for fundamental analysis have significant relationship with age, education and income level of investors in Nepalese context where it has been shown significant relation in international studies. Descriptive and inferential analysis was used to get some meaningful understanding from the research. Mean rating of all factors are calculated for using ANOVA test statistics analysis and four key factors among nineteen factors are taken to test significant relationship using Chi-square test analysis has shown somewhat opposite relationships compared to other research findings in international context The findings of the study showed that Nepalese investors have increasingly becoming aware of need to carry fundamental analysis before investing in shares of commercial bank. Also it showed that investors do lot of self-research while making fundamental analysis of shares of commercial banks. However, the finding that age, education and income level factor does not influence the consideration given to fundamental factors is quite surprising. This can be a starting point for other researchers on exploring why such relationship was shown in this study. Female investors are almost none in Nepalese capital market. From this study it can be concluded that Nepalese investors give priority to both industry and company factors regardless of their investment horizon and market trend . In recent years lots of changes has occurred where investors are more educated, knowledgeable and study the industry and company variables before making investment in shares of commercial banks. Fundamental analysis have become a main technique for Nepalese investors to decide when to invest in share of commercial banks

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Chapter 1 Introduction
1.1 Background of the Study Investment in the shares of banks and financial institutions occupy a major portion of the Nepalese capital markets (Bajracharya, 2004).Banks share price is the result of combined effect of changes in economy, industry and company fundamentals (Karpagavalli, 2011). The combined fundamental factors i.e. economic, industry and company determine the return in investment of shares of commercial banks (Kevin, 2001). Fundamental analysis is a systematic approach for determining the future dividends and share price of a security based on the premise that share price behavior is influenced by fundamental factors (Abdolahzadeh, 2002). Each share is assumed to have an economic worth based on its present and future earning capacity called intrinsic value or fundamental value. The investor can make use of available information and examine related fundamental factors and then arrive at an investment decision. Fundamental Share prices are the most important indicator readily available to the investors for their decision to invest or not in a particular share. Theories suggest that share price changes is associated with changes in fundamental variables which are relevant for share valuation like payout ratio, dividend yield, capital structure, earnings size of the firm and its growth,[Wilcox (1984), Rappoport (1986), Downs (1991)]. In effect in investors are always mindful of the macroeconomic and microeconomic variables in analyzing investment in stock as they effect the performance of and turnover of banks, return of investors by way of dividend Fundamental analysis, unlike technical analysis, is more powerful tool to find the intrinsic value of stock for both bullish and bearish trend (Linter, 1956). Investors with long and short investment horizon are likely to choose or give priority to fundamental factors differently (Hamada 1972).

Study of fundamental factors used by investors in trying to come up with fair value of share of bank shows investors with varying attributes tend to select and give importance to specific company and industry factor in rather distinctive way making the fundamental analysis unique to each individual (Ariff and Khan, 2000). The fundamental factors relevant to banking industry are divided into three groups: Company factor: e.g. profit, management team, liquidity Incomes, loan size etc. financial power, products, management and workforce relations Industrial conditions: e.g. stability and current competitive situation, central bank directives and policies Economy/market conditions: economic cycles and Money and Financial Policies of the Country (Raei, 2010) Several studies have attempted to identify company specific and industry fundamental variables which explain variations in common stock return. Investors give importance to fundamental factors based on their investment horizon, market trend and overall economic and political situation of the country. This attempt to include factor or variable in their analysis of shares of banks leads an investor to constantly review their selection of factors with regard to changes in time and situation. Individuality plays vital role in determining with factor to consider superior and which one as inferior for fundamental analysis (Jonz, 2002). In the context of Nepal, Nepalese investors largely comprised of passive investors who would buy shares during IPO and sell shares with no consideration to market conditions (Pradhan, 2011). Dangol (2010) concluded in his research that majority of the investors are not well informed, they mostly go by market whims rather that market fundamentals while investing in stocks of banks and other sector. However, in recent decades the trading in shares of Nepalese firms and specifically that of commercial banks has become a profession on its own. There are altogether 58 brokers where professionals trade actively using fundamental and technical analysis as a tool to find the correct price at which profit can be made. This study has attempted to understand what key fundamental factors are important to Nepalese investors in determining selection and investment in shares of commercial banks.
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Moreover, it attempts to understanding whether consideration or choice of industry and company factors changes with change in demographics of investor. Here age, education level and income level are taken as key demographic attributes of investors. Most of the Nepalese researchers have used fundamental variables based on their knowledge and sometime arbitrarily too while studying fundamental analysis done by investors in shares of firms listed in NEPSE. This study has figured out key industry and company factors based on pilot study using convenience sampling method.

1.2 Statement of the Problem Most of the researchers have devoted significant effort in trying to figure out relationship between stock return and fundamental variables. This is true in Nepalese context as well. Literature review on role of fundamental analysis in determining stock return is plenty in both national and international journals. In Nepalese context, the review of previous research studies shows that there lacks proper study of what fundamental factors are investors actually considering while making fundamental analysis of stocks of commercial banks. The researchers have primarily focused on determining stock return based on implicit fundamental variables (Sushma Pradhan (2011). Most of the Nepalese researchers have used fundamental variables on their research based on their knowledge and sometime arbitrarily too while studying fundamental analysis done by investors in shares of firms listed in NEPSE which is true to fundamental analysis of commercial banks. In the existing studies there exist many gaps such as that there may be difference of opinion with use of fundamental factors when it comes to different age group of people, occupations and educational level and income in the stock market. Another gap that exists is what factors investors consider when investing for long term and short term and while taking positions in bearish or bullish trend market in stock of commercial bank. No papers in the literature (I am aware of) examine (using primary survey) exactly what factors investors consider for fundamental analysis of shares of commercial banks in Nepal.
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1.3 Purpose of the Study This research aims to find out following aspects of Nepalese investors choice of fundamental factors while making analysis of stocks of commercial bank traded in NEPSE To determine which industry and company factors investors consider the most while making fundamental analysis of stocks of commercial banks To determine how rating of industry and company factors changes with change in investors investment horizon (long and short horizon) To determine how investors rate factors for bullish and bearish market trend To determine the relationship between investors demographic profile and factors considered for fundamental analysis

1.4 Significance of the Study There has been long belief that most of the investors are passive investors who trade in stocks based on rumors and influences by others. This to very extent can be generalized to those investors who mainly buy shares during IPO. By focusing entirely on those investors who are members with brokers and are well informed about the changes in industry and company variables of banks this study will explore those key fundamental factors that has proven to be useful to predict the share price movement. Thus, can be a useful resource for investment analysts, share brokers and new comers in the capital market to get insight into what factors are most relevant and suitable for analyzing the share price of commercial banks. And which new industry and company factors have become important with time and practice of investing in shares of commercial banks This study can prove to be useful for policy makers as well since it will explore the current trend in investment in bank shares and level of knowledge with which they start their trading and source of information investors consider worth for making fundamental analysis. Here policy makers can find ways to make trading more transparent and disseminate information in the most effective way about financial markets and trading. There has been lot of study on how fundamental variables affect the stock return in Nepalese stock market but rarely on what fundamental variables investors choose while doing fundamental analysis of stocks of commercial banks. This study aims to identify major
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variables investors take into consideration and among such variables which factors are most important with regard to market situation and their investment horizon. This study will provide a guideline to other researchers and students on understanding Nepalese investors choice of fundamental variables and how it affects their analysis of stocks of commercial banks

1.5 Research Hypotheses

a) H0: There is no statistically significant difference in the mean consideration given to industry factors between different age group of investors: i. With long or short investment horizon ii. When market is bullish or bearish

b) H0: There is no statistically significant difference in the mean consideration given to company factors between different age group of investors i. With long or short investment horizon ii. When market is bullish or bearish c) H0: There is no statistically significant difference in the mean consideration given to industry factors between different education level investors i. With long or short investment horizon ii. When market is bullish or bearish

d) H0: There is no statistically significant difference in the mean consideration given to company factors between different education level investors i. With long or short investment horizon ii. When market is bullish or bearish
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e) H0: There is no statistically significant difference in the mean consideration given to industry factors between different income level investors i. With long or short investment horizon ii. When market is bullish or bearish f) H0: There is no statistically significant difference in the mean consideration given to company factors between different income level investors i. With long or short investment horizon ii. When market is bullish or bearish

g) H0: There exists no significant association between age group of investors and their consideration of ideology of political party in government, liquidity position, profitability and management team as factors for fundamental analysis of shares of commercial banks h) H0: There exists no significant association between education level of investors and their consideration of ideology of political party in government, liquidity position, profitability and management team as factors for fundamental analysis of shares of commercial banks i) H0: There exists no significant association between income level of investors and their consideration of ideology of political party in government, liquidity position, profitability and management team as factors for fundamental analysis of shares of commercial banks

1.6 Operational Definitions and Assumptions Shares: A share is a single unit of ownership in a corporation, mutual fund, or any other organization. A joint stock company divides its capital into shares, which are offered for sale to raise capital, termed as issuing shares. Thus, a share is an indivisible unit of capital, expressing the proprietary relationship between the company and the shareholder.
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The denominated value of a share is its face value: the total capital of a company is divided into a number of shares. For this research purpose the term share means unit of ownership in commercial banks of Nepal. Commercial Bank: A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs. However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fees. Here, for the research purpose commercial banks mean all the 32 commercial banks registered and licensed by Nepal Rastra Bank. Fundamental Analysis: Fundamental analysis is the examination of the underlying forces that affect the well-being of the economy, industry groups, and companies. As with most analysis, the goal is to derive a forecast and profit from future price movements. At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition. At the industry level, there might be an examination of supply and demand forces for the products offered. For the national economy, fundamental analysis might focus on economic data to assess the present and future growth of the economy. To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock's current fair value and forecast future value. If fair value is not equal to the current stock price, fundamental analysts believe that the stock is either over or under valued and the market price will ultimately gravitate towards fair value. Industry Factors: Industry factors are those factors present in the external environment of the bank and influence the performance of the bank. Here key industry factors are ideology of political party in government, impact of regulation & policies, corporate governance, liquidity position

Industry factors included in this study are: 1. Ideology of political party in government A political ideology is a coherent and consistent set of beliefs about who ought to rule, what principles rulers ought to obey, and what policies rulers ought to pursue. Whether people have a political ideology can be measured in two ways: (1) by seeing how frequently people speak in terms of broad political categories-liberal or conservative-when they discuss politics; and (2) by measuring the extent to which we can predict a person's view on one issue by knowing his or her view on another issue 2. Impact of regulation and policies Policy consists of regulation and control over the growth of money and credit in an attempt to pursue broad economic goals such as full employment, avoidance of inflation, and sustainable economic growth. Its principal tools are Open-Market Policy Tool, Discount Rate Policy, Changing Reserve Requirements on Deposits and Other Bank Liabilities. These tools aim at keeping unemployment low, inflation low and to ensure high economic growth. 3. Corporate governance The corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company. It is based on the underlying principles of all good governance: accountability, transparency, probity and focus on the sustainable success of an entity over the longer term. 4. Liquidity position The term liquidity signifies financial flows of various kinds, ranging from that originating from the central bank to the overall existent financing available in the banking system. Eventually liquidity is determined by the net change in the bank reserves through interaction among the various autonomous factors that drive liquidity and its management by the Reserve Bank. To that extent, the daily outstanding position in the Liquidity Adjustment Facility (LAF) emerges as the key indicator of the funding available in the system
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Company factors: Company (bank) factors are those factors which are directly related to the bank. These factors are major indicator of banks performance. Here key company factors are capital adequacy, earning per share, Interest spread, cost of fund, profitability, loan portfolio size, loan loss provision, dividend history, size of deposit, non-performing loan, number of branches, management Team, Directors in Board, Overall image of bank/brand name, years of operation Company factors included in this study are: 1. Capital adequacy Capital adequacy is intended to ensure that banks maintain a minimum amount of own funds in relation to the risks they face so that banks are able to absorb unexpected losses. Adequate capital ensures that unanticipated situation does not present any serious challenge to banks solvency 2. Earning per share It is the rupee earning for each share where relation of earning (net income) to equity investment is determined. It calculated as net income divided by number of shares outstanding. 3. Interest spread It shows the additional cost of borrowing that the banks take on to perform intermediation activities between borrowers and fund lenders. I is also a premium for the risk that the banks undertake; it compensates for loan defaults and for risk related to cost of funding.

4. Cost of fund The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one of the most important input costs for a financial institution. For lenders such as banks and credit unions, cost of funds is determined by the interest rate paid to depositors on financial products including savings accounts and time deposits.
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5. Profitability Banks profit by earning more money than what they pay in expenses. The major portion of a bank's profit comes from the fees that it charges for its services and the interest that it earns on its assets. Its major expense is the interest paid on its liabilities. The traditional measures of the profitability of any business are it return on assets (ROA) and return on equity (ROE). 6. Loan portfolio size It is the Total of all loans held by a bank or finance company on any given day. Loans that a lender (or a buyer of loans) is owed. The loan portfolio is listed as an asset on the lender's or investor's balance sheet. The value of a loan portfolio depends on both the principal and interest owed and the average creditworthiness of the loans. 7. Loan loss provision The loan loss provision account is a contra-asset account, which reduces the loans by the amount the banks managers expect to lose when some portion of the loans are not repaid. Periodically, the banks managers decide how much to add to the loan loss reserves account, and charge this amount against the banks current earnings. This provision for loan losses is recorded as an expense item on the banks income statement to absorb losses when economic conditions worsen. 8. Dividend history Dividends are income tax free in the hands of the recipient. The profit earned by the Company (after payment of Corporate Income-tax) can either be retained in the Company for its future financial needs or distributed to shareholders in the form of dividend. According to the Companies Act, 1956, after satisfying the rights of preference shares, the equity shares shall be entitled to share in the remaining amount of distributable profits of the company. Dividend history usually refers to the frequency of dividend distribution paid in the companys history and its dividend payout ratio.

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9. Size of deposit Banks accepts deposits from its customers (depositor). The amount of cash deposit collected and retained in the bank at a particular period of time determines the size of deposit. Size of deposit determines banks cost of fund and on the other its liquidity position (or lending capacity) 10. Non-performing loan Non-performing loans (NPLs) have been widely used as a measure of the asset quality among lending institutions and are often associated with their failures and financial crises. It can be defined as an advance where payment of interest or repayment of installment of principal or both remains unpaid for a period of two quarters or more. 11. Number of branches It is the number of banking outlets opened in the various geographical areas to facilitate the banking access to customers within and/or outside the country.

12. Management team The composition of top, middle and lower level managers and staffs who are directly involved in the day to operation of the company and have duties and responsibilities to fulfill. For bank it accounts for all the staffs work for bank in providing financial services to customers 13. Directors in Board Typically, a board includes individuals who are bank officers or employeescalled management or inside directorsand outside directors who are neither officers nor employees of the bank. Outside, independent directors bring experiences from their fields of expertise. These experiences provide perspective and objectivity as the director oversees bank operations and evaluates management recommendations.
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14. Overall image of bank It is the perception created in the minds of the stakeholders through its operation, services and other activities. A positive image of a bank is created when bank follows guidelines of regulator, provides transparency in financial activities and satisfies all its stakeholders without affecting each others interest and provides distinct services to its customers 15. Years of operation It is the years of operation in the business continuously. Organization with long history of presence in the business is usually easily recognized by people and a reputation is build based on its years of operation and service. 1.7 Organization of the Study The study is organized into a total of five chapters. Chapter one: Introduction It contains background of the study including statement of the problem, purpose of the study, significance of the study, research questions, operational definitions and assumptions, organization of the study and limitation of the study Chapter two: Literature Review and Theoretical Framework It consists of literature review and theoretical framework related to international studies as well as the review of studies in Nepalese context. Besides, this chapter ends up with concluding remarks associated to the findings and major ideas of national and international studies. Chapter three: Research Methodology It covers the research plan and design, description of the sample and sampling technique which includes nature and sources of data and technique used to collect data. It also consists of instrumentation, method of analysis, data collection procedure and time, validity and reliability of method used and overall analysis plan.

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Chapter four: Results and Discussion It basically focuses on the systematic presentation and analysis of the data and interpretation and discussion associated with the major findings of the study. This chapter is further divided into two sections, namely, analysis of primary data using descriptive and analytical analysis Chapter five: Summary and Conclusion This chapter provides a summary of overview on all works carried out in chapter one through four including major conclusions derived from the study that are consistent or contradicted with past studies. This chapter also includes a separate section for recommendations about selection of variables, study period and such that are expected to be beneficial to students, investors and researchers for the further studies

1.8 Limitations of the study Limitations occur in every research work and this research also has some limitations. The limitations of the study are as follows: Time: There is need to complete the research within three months. This leaves the researcher with inadequate time to deal every aspect of the issues of the topic in details. Thus, this research will not cover everything but focus on limited issues. This research is limited in its scope. Cost: This is a self-financed research. That means, the researcher will have to bear all the cost of conducting the research. So the researcher has to work with limited budget making the hiring of specialists and other manpower to collect and analyze data and its management is not possible. Availability of Data: This type of research would have to depend heavily on primary source of data. Thus, availability of secondary data is expected to be limited. Manpower: The researcher has to work on his own. Collection of data, interview of people, preparation of report and such has to be done by the researcher himself. The

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researchers lack of knowledge in any area/ subject can reduce the quality of the research outcome

Chapter 2 Literature Review and Theoretical Framework

2.1 Literature Review Graham and Dodd (1934) studied the origin and importance of fundamental analysis for the share price valuation. The authors have argued the importance of the fundamental factors for investors while making investment decisions in stocks of financial institutions
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Osaze (1985) identified corporate earnings and dividends as key company fundamentals that were highly taken into account by share traders of banks and financial institutions. He pointed that intrinsic value of share of bank depends on declaration of earnings and dividend payout ratio by banks. This too determined how investors hold the shares of bank. Negy and Obenberger (1994) examined the factors influencing individual investor behavior in considering which fundamental factors are important for banks share analysis. The researchers distributed a list containing 34 affecting variables on decision making among the shareholders of listed companies largely comprising of banks and financial institutions. The findings show a combination of financial and nonfinancial factors. According to these findings, one can conclude that investors decisions include a continuum of financial and nonfinancial items that each investor may consider a different importance for each factor. The result of the study showed that in the bearish market trend non-financial factors like banks core team, policies of government, GDP growth rate, base interest rate, customer base, relation of bank with government officials was counted vital whereas in the bullish market investors looked in company fundamentals mainly profitability and liquidity for calculating intrinsic value of stock. This study also showed that age factor of investor hugely determined their risk taking propensity and which factors they considered to be risk. Young investors like to look company factors as shown by balance sheet in more detail while investors above 30 years gave industry factors like level of competition, government regulations that could hamper bank performance more importance. Moreover, elder investor i.e. 30 above ones took hold shares for more than two years which was uncommon among investors below 20 years. Self research was the most applied tool to analyze the fundamental factors. Ariff (2000) investigated the key fundamental determinants of stock prices in Pakistan with focus on understanding relationship between investors demographic characteristics and fundamental factors included in their analysis. He also investigated the long-run relationship between company fundamentals and response of investors that led to stock price behavior. However, the lacunae that needs to be addressed and is being addressed here is the long-run relationship between economy fundamentals and stock price behavior.

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Kevin (2001) pointed out the key economy, industry and company fundamental factors for banks and financial institutions. According to his study the economy fundamentals include Gross Domestic Product, inflation rate, exchange rate, interest rate and government spending in infrastructure, industry fundamentals include demand and supply of money, the emergence of domestic and multinational rivals substitute services, liquidity position and changes in government policy and company fundamentals include the years of operation, the quality of management, brand image of bank and financial institutions, financial ratios, labor/management relation and dividend stability Davari (2011) had conducted a survey that explored on affecting factors on fundamental analysis by investors in Isfahan Regional Exchange with focus on listed banks and concluded that macroeconomic factors have less impact on investors decisions and among company related factors, competitive status, profitability analysis and financial analysis impact on investors decisions. Bullish and bearish stock price of bank determines which macroeconomic and company factors to consider for calculating the risk and return. It was found that during bullish trend investors gave more importance to company factors (especially profitability) and in the bearish trend it was the competitiveness among banks and policy of central bank that mattered most. Venkatesh, Tyagi and Ganesh (2012) conducted a study on Fundamental analysis and its usage in Indian capital markets: A survey which investigated fundamental factors investors use to make fundamental analysis in investing in financial institutions located in major cities. The researchers used questionnaire survey. The findings of the research reveal that more than 85 percent of the respondents rely upon both Fundamental to analyze on which stock to invest in. This was true to investing in stocks of bank where investors highly preferred company factors (profitability, earning per share, dividend payout and management team) in bullish market trend whereas economic and industry factors were highly studied for understanding its effects in bearish market. The survey envisages at providing insights about the way traders operate in the market by using the fundamental analysis information. The survey covered Brokers, Sub-Brokers, Fund managers, Portfolio managers and others. The study puts an effort in trying to understand economic, industry and company variables as a whole. The structured questionnaire comprehensively includes all these components so as to arrive at that factor which is driving the market. The study
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records top ten Economy and Company factors as considered important by the respondents. Indicators considered for investing, company financial and non-financial factors and various Economic factors considered for judging the growth of the economy were included in the questionnaire. Data sources and Methodology employed by the study consisted of a closeended questionnaire for the analysis. The closed ended questionnaire was admitted to a sample of 600 respondents. Since the respondents chosen are from experienced seniors, the analysis made was more accurate. The questionnaire was statistically validated using various statistical tools such as, Mean, Standard deviation. One way ANOVA test was conducted and was tested at 1%, 5% and more than 5% significance levels. The bottom line of the survey concluded that, Economy and Company factors are most widely used fundamental analysis components for forming forecasting views. 98% of the respondents have envisaged the fact that company factors are important than the economy or the industry. With this it was concluded that among EIC factors Company specific financial and non-financial information acts as a major influencing factor while deciding upon which stocks to invest in.The study concluded that (1) investors are largely comprised with those with long investment horizon and importance of factors differed with their investment horizon. (2) For bank share analysis, investors gave highest importance to liquidity position of the industry and profitability of the bank for predicting stock return. (3) Industry factors were more important in bearish trend and company factor in bullish trend. Hossein, Nasser and Mohammadbagher (2012) studied the affecting factors on share analysts decisions regarding their share analysis in the Tehran Stock Exchange (TSE). This study attempted by in order to depict the affecting factors on analysts decisions in the format of fundamental analysis. This analysis was studied in three sectors: (1) economy/market, (2) industry, (3) firm. It employed analytical approach to study affecting factors on analysts decisions. Its statistical population contains analysts in brokering companies at Tehran Stock Exchange. The tool to collect data was questionnaire and SPSS software was used to analyze data. This study focused on two major research questions: (a)which factors namely economy/market, industry and firm have the highest importance in analysts fundamental approach? (b) Among above three factors, which one has the highest importance? Sampling and Sample Volume used by their study used sample means those analysts who work in capital market to advise and analyze the market. They used simple
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random sampling method for a limited population. It showed that investors in the Tehran stock exchange look for overall performance of the two or three big players in the banking industry. Company factors were found to be more important than industry factors since few banks could manipulate the overall performance of the industry. Based on the results, for fundamental analysis, share traders considered mostly the management team, BOD, cost of fund, dividend payout, profit margin, P/E ratio and directives of central bank affecting the performance of these major banks. The output of the statistical test showed that investors with different age considered firm specific factors differently. Young investors gave highest importance to profitability whereas middle age and senior investors gave highest importance to capital adequacy and goodwill of bank. Allahawiah and Sameer (2012) assessed the factors affecting Stock Market Prices in Amman Stock Exchange. This survey study had used empirical data from primary sources, mainly by conducting a survey among a sample of portfolio managers, financial, brokers, and top managers. They found that dividend policy and past record of dividend pay as key a key factor that investors considered as an affecting factor on stock market price for investors with long target on stock market. The empirical findings also showed how internal management of the bank had major impact on its performance in the stock exchange. The quality of management team showed that it had positive relationship to the stock market price. The financial position with focus to liquidity position had positive relationship with stock market price of banks. Portfolio managers were found to be giving top most priority to the liquidity positions. This finding represented a step forward in understanding stock market price behavior and how investors determine which fundamental factor is important for them. The statistical tests showed that there existed significant relationship between demographic characteristics of respondents and their choice of fundamental factors. Brokers given their level of knowledge gave highest priority to profitability whereas portfolio managers gave more importance to position of particular bank in the industry and loan portfolio, deposit collection and overall management team. Thus the basic findings from the research from the ANOVA analysis indicate that education level and years of experience had significant influence on rating given to various firm specific fundamental factors. Professional investors choice of factors for fundamental analysis changed with their investment horizon and market conditions affecting performance of bank.
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Shrestha (2010) studied the level of knowledge of Nepalese share traders regarding fundamental analysis of factors related to banking industry. The researcher has tried to highlight on education level of investors regarding investment in shares of commercial banks. The study showed that in recent times investors have become more aware, they evaluate all the major factors before making investment in share market. It had collected data through primary collection and secondary collection with prime focus on survey questionnaire which included both open ended and closed ended questions. A statistical tool like chi-square was used. Moreover, from the study it was found that there exists significant relationship between occupation of the investors and the type of fundamental factors they consider for calculating stock return. However, it was found that the person who makes frequent investment in shares doesnt depend upon his/her qualifications; how frequent does an investor makes investment, how aware is the investor about the share market and how much satisfied he/she is dependent upon the age group in which investors falls and level of awareness about share market. In Nepalese context investors showed no significant difference in the way they considered factor to be important for bullish and bearish trend market. She concludes that investors are much knowledgeable about the company factors of banks and on two or more source for analyzing the shares of banks. Pradhan (2011) had conducted a research study on Fundamentals and stock return in stock market of Nepal for the partial fulfillment of Masters of Business Administration in the year 2011 under Ace Institute of Management, Pokhara University. The study analyzed the relationship between stock returns with firm specific fundamental variables, such as earnings yield, cash flow yield, market capitalization of equity, book-to-market equity ratio, equity beta, book and market leverage in Nepalese context. The method of data analysis included correlation analysis, analysis by forming portfolios and cross sectional regression analysis. Also, dealt with different statistical tests of significance for validation of model such as t-test and F-test. For analysis of primary data it employed percentage frequency distribution, cross tabulation, mean ranking scores of responses to likert scale items and nonparametric test of statistical significance. An attempt was made to describe the character of common stock returns of 14 commercial banks with a total of 47 observations during fiscal year 2004/05 through 2009/05 through 2009/10 by using descriptive statistics with respect to
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firm specific fundamental variables. The study used both secondary and primary data. Survey questionnaire was use to collect data with emphasis on what specific firm related factors that investors considered while calculating intrinsic value of stock. The findings of the study showed that investors opt for number of different fundamental variables while making investment in stock of firms. It showed that attributes like experience, education level and age factors have crucial role to play when it comes to selection of factors for analysis before buying shares of a company. These attributes affect choice of firm specific fundamental variables differently. Mostly experienced investors give special priority to financial statements and midterm reports and among financial statement elements, real EPS has the highest importance whereas less experienced and/or educated investors are fond of stock price trend and find fundamental factors less useful while making fundamental analysis of stocks. Kadariya (2012) had conducted a study on Factors affecting investor decision making: A case of Nepalese capital market as a full length research paper for M. Phil in the year 2012 under Tribhuvan University. The study attempted to analyze the market reactions to tangible information and intangible information in Nepalese stock market, the descriptive and correlational research design had been employed and the primary data used for the analysis. Method of analysis employed by the study intended to analyze the market reactions of tangible and intangible information and to analyze the investors behavior in capital market. The factor analysis had been employed for the data analysis along with descriptive statistics and correlation analysis. The analysis of first hand data information provides some findings. The primary analysis includes the demographic features of the respondents, their perception towards the capital market issues as well as the specific analysis identified the four major components that are used to analyze prior to making the investment decisions. The major findings of his study showed that Nepalese stock market starts to attract younger investors in recent period as the majority of the stock investors are younger, most used methods of investment are fundamental analysis, and the market noise, media and informal talks. Similarly the study further showed that the tangible components such as dividends, earnings, number of equity, and book-to-market ratio and the intangible component like political party led government are considered the top five most important factors for investment decisions as per the opinion of individual stock investors also the capital structure and average pricing
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method is one factor that influence the investment decisions, the next is political and media coverage, the third factor is belief on luck and the financial education, and finally the forth component for stock market movement is trend analysis

2.2 Theoretical Framework Theoretical framework includes both independent and dependent variable. For my research study, industry and company factors are taken as dependent variables whereas investors demographic profile i.e. Age, Education level and Income level are taken as independent variable. From the literature review of several articles, the theoretical framework has been developed. Independent Variable (Investors demographic profile) Age Education Level Income level

Fundamental Analysis of stocks

Dependent Variable (factors considered) Industry factors Company factors

Figure 1: Theoretical Framework

Detail explanation of the theoretical framework Age of investor: Here, age group is taken as independent variable for this study. It is generally found that age has significant influence on the choice of factor selection for fundamental analysis and their importance rating to those factors. Investors between 20 to 30 are usually rate company factors high and give more importance to company factors especially profitability of bank in their analysis. The review of literature show that investors above 30 highly consider industry factor especially government policies and ideology of political party while making fundamental analysis of shares of banks. Also it shows
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investors above 30 give attention to type of management team and BOD in their analysis. The researches show that there exists significant relationship between age group factor and consideration given to fundamental factors of banks in their analysis Education level of investor: Here, education level of investor is taken as independent variable for this study. With higher education comes better understanding of fundamental factors related to banks. The literature review shows that there exists significant relation between education level of investor and type of factors they consider for analysis. It is seen that investors with lower education level chose profitability, management team and reputation factors for consideration while those above bachelors level choose impact of regulation and policies, capital adequacy, loan portfolio and such factors which require deeper understanding and knowledge. Income level of investor: Here, income level of investors is taken as independent variable for this study. There is little research study on what role income level play in influencing investors selection and consideration of fundamental factors for analysis. Also, it is unclear whether income level of investors can influence the rating and importance they give to fundamental factors. For this research purpose this factor is taken as influencing factors for determining factors investors consider for fundamental analysis of shares of commercial banks. Fundamental analysis of stocks: It maintains that markets may price a security in the short run but that the correct price will eventually be reached. Profits can be made by trading the mispriced security and then waiting for the markets to recognize its mistake and re-price the security. Here, what fundamental (industry and company) factors investors choose while making selection and investment in stocks of commercial banks are studied Industry factors: Industry factors are those factors present in the external environment of the bank and influence the performance of the bank. Here, industry factors are taken as dependent variable for this study.

The key industry factors listed in this study and its importance to investors for fundamental analysis of shares of commercial banks is defined below:
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a. Ideology of political party in government Ideology of political party in government has a major impact on geo-economics of the country. It plays vital role in involvement of private sector in economic activities. Political party in government can influence banks through Nepal Rastra Bank (NRB), which is the regulator for banks and financial institutions, using regulation and monitoring as tools. Investors in Nepal have preferred Democratic Party like Nepali congress to be in government for the deregulation in banking sector. This they think will have positive impact on performance of banks and development of capital market b. Impact of regulation and policies This is also a key factor investors think will have influencing impact on share price of commercial banks. NRB has in past tried to intervene the banking sector by issuing several guidelines related to lending to real estate sector and in recent setting a base interest rate. Investors therefore, take this factor as key to determining banks profitability and meeting long term objectives. Usually it has been seen that flexible regulation and policies have positive impact on share price of banks c. Corporate governance Corporate governance has been hot topic in Nepalese banking sector. Usually managerial conflict and misuse of depositors money has impacted my financial institutions. However, it is less prevalent in case of commercial banks with few exceptions. Investors want good corporate governance in commercial banks and does want same thing to repeat in cases like Nepal Bangladesh bank. It is found that investors sell their shares as soon as news of management conflict or other issues about bank arises. Good corporate governance taken into consideration by investors as it affects the performance and goodwill of bank. There exists positive relationship between good governance and upward share price movement.

d. Liquidity position It is probably the most important fundamental factor for investors when it comes to making fundamental analysis of shares of commercial banks. Liquidity is largely determined by
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central bank actions and autonomous factors such as government financial flows, foreign capital flows and demand for currency have on excess reserves of banks with the Reserve Bank. This seriously tightens the banks ability to lend and also it has to attract deposit by providing higher interest rate. This significantly reduces banks profitability. Investors see liquidity as key factors as banks can easily become insolvent given that depositors demand their money within short period. It is however, not always good to have excess liquidity as it increases cost of fund and underutilization of capital.

Company factors: Here company (bank) factors are those factors which are directly related to the bank. These factors are major indicator of banks performance. Here, company factors are taken as dependent variable for this study. The key company factors listed in this study and its importance to investors for fundamental analysis of shares of commercial banks is defined below: a. Capital adequacy Banks complying with the capital adequacy of central bank are exposed to lower risk and have good loan portfolio. Strong capital position are critical in ensuring that individual banking organizations operate in a safe and sound manner, which, in turn, is crucial for maintaining the stability of the financial system and fostering economic growth. Investors can easily find whether a bank is meeting capital adequacy level or not by simply studying its financial statements. Higher capital adequacy have however lower profitability and thus lower retained earnings for future investment. It occupy important part in the fundamental analysis of banks since it is gives a picture of whether or not bank is taking only that much of risk which its capital can absorb in case of bad loan or other financial problems. Investors give high consideration to it risk to bank capital will reflect in the share price of bank. b. Earning per share An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two banks could generate the same EPS number, but one could do so with less equity (investment) - that bank would be more efficient at using its capital to generate income and, all other things being equal would be a "better"
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company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures. Investors are usually willing to pay more for shares of those banks with higher EPS. c. Interest Spread From the perspective of the banks, interest spread is important factor that determines which bank is operating art higher interest margin. The interest spread is also a premium for the risk that the banks undertake. As such, interest spread is a measure of bank efficiency and determinant of intermediation cost and profitability of the banks So bank with higher spread can enjoy relatively safe position and also have adequate earning to compensate risk related to cost of funding and cover loan defaults. So share traders are interested in knowing at at what rate they borrow from depositor and what the average rate of lending. It is usually the established banks that have higher interest spread and investors are willing to pay higher price to shares of those banks. d. Cost of fund The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one of the most important input costs for a financial institution, since a lower cost will generate better returns when the funds are deployed in the form of short-term and long-term loans to borrowers. The spread between the cost of funds and the interest rate charged to borrowers represents one of the main sources of profit for most financial institutions. For lenders such as banks, cost of funds is determined by the interest rate paid to depositors on financial products including savings accounts and time deposits. In Nepal it is seen that newly established commercial banks have higher cost of fund. This is because they need to attract deposits from other customers of other banks. Cost of fund is an important fundamental factor for bank since it is the core business of bank to collect money by providing interest on deposits. Higher cost of fund is not always a negative thing but banks tend to provide loans to risky proposals in order to charge interest that will cover higher rate offered on deposits. Share analysts take into consideration this factor in order to determine future performance of bank and its possible impact on share price.
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e. Profitability Besides earnings from core business of bank, the major portion of a bank's profit comes from the fees that it charges for its services and the interest that it earns on its assets. Its major expense is the interest paid on its liabilities. The level of profit a bank makes has profound impact on its ability to lend and provide advances to borrowers and also investment in lucrative marketable assets. In Nepal, return on assets (ROA), return on equity (ROE), capital adequacy ratio (CAR)nonperforming loan ratio (NPL), interest expense to total loans (IETTL) and net interest margin (NIM) are taken as key indicator of bank profitability. Share traders examine these ratios to decide which banks share to buy. f. Loan portfolio size Banks with high value of loan portfolio have positive impact on its financial condition of bank and its liquidity. Banks try to diversify their loan portfolio in order to minimize the risk of default from large borrowers or collapse of a sector like the one happened in real estate. The value of a loan portfolio depends on both the principal and interest owed and the average creditworthiness of the loans. So banks with large loan portfolio size but poor repayment of loans can result in addition of portion of profit to loan loss provision. Investors are more interested in buying shares of commercial banks with high value loan portfolio

g. Loan loss provision The rules governing banks loan loss provisioning and reserves require a trade-off between the goals of bank regulators, who emphasize safety and soundness, and the goals of accounting standard setters, who emphasize the transparency of financial statements. A strengthening of accounting priorities in the decade prior to the financial crisis was associated with a decrease in the level of loan loss reserves in the banking system. In Nepalese context loan loss provision has always been highly regulated by NRB and this has had impact on profit of well-established commercial banks. NRB follows basel accord for loan loss provisioning to commercial banks. Nepalese investors look at loan loss provisioning as crucial factor when it comes to making analysis of shares of commercial
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banks. In Nepal usually new banks have higher loan loss provisioning compared to older banks.

h. Dividend history There is no legal binding on banks to declare and distribute dividends decisions regarding the amount and frequency of dividends are solely at the discretion of the board of directors. A shareholder does not have a say in the decision making process of declaring dividend, amount of dividend, etc. The dividend on equity shares is not fixed and may vary from year to year depending on the amount of profits available. The decision to distribute dividend usually limits the banks ability to finance future investment opportunity and expansion of its own operations. Similarly it has been found that after the declaration and distribution of dividends share price falls. At the same time Investors like to buy shares of those banks which distributes dividends yearly and with high payout ratio. Frequency and amount of dividend paid occupies major portion of fundamental analysis of banks by investors i. Size of deposit Size of deposit directly determines the cost of fund of banks. Banks with large deposit collection have lower returns from its core business. And worst if it has lower loan to deposit ratio. Banks for this reason have to lower interest rates on deposit to discourage savings and increase interest rates to attract deposit and encourage saving. In Nepal, commercial banks have the highest deposit collection and that too high amongst older banks like NABIL, Standard Chartered bank etc. it is found that share traders give less importance to size of deposit while making fundamental analysis of commercial banks.

j. Non-performing loan All banks need a loan classification or grading system to facilitate the monitoring and management of credit risk in their loan portfolios. Non- performing loans (NPLs) have a deleterious effect on the return on assets of banks in several ways: they erode current profits through provisioning requirements; they result in reduced interest income, increased pressure on net interest margin (NIM) thereby reducing competitiveness, steady erosion of
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capital resources, increased difficulty in augmenting capital resources, reputational risks arising out of greater disclosures on quantum and movement of NPLs. NPL is a major factor in the fundamental analysis of commercial banks. Share price of banks falls which have higher NPLs. k. Number of branches Large number of branches is a major opportunity for banks to increase its market. Banks with larger number of branches usually have good reputation among customers and share traders. However, opening of branches to first serve the remote market can turn out to be unprofitable as it increase operational cost and wait for long to make banking habit among people in remote areas. It is seen that share traders are less interested in knowing number of branches of bank in their analysis. l. Management team It is the management team that leads the bank to accomplish its long term objectives and plans. The strategy formulated by managers and its implementation have huge impact on the performance of bank. Also, the people in the management team especially the CEO has major influencing role thriving in the competition. Commercial banks are known for their professional staffs and management team. Conflict and internal disputes among management team can seriously hamper both image and operation of the bank. In Nepal, it is not uncommon for share traders to decide on investing in shares of a particular bank based on the reputation of people in management team. Anil Shah of Mega bank is a good example. Many research has shown that management team of a bank is highly considered by investors in their fundamental analysis of banks which is true in Nepal as well. m. Directors in Board A banks board of directors plays a critical role in the successful operation of the bank. The health of a bank depends on a strong, independent, and attentive board that adopts effective corporate governance practices. The board has the fundamental responsibility of directing the management of the banks business and affairs, and establishing a corporate culture that prevents the circumvention of safe and sound policies and procedures. In addition, directors
28

have certain fiduciary responsibilities to the banks shareholders, depositors, regulators, and communities it serves. Share traders are highly interested in knowing who the directors in board are because this gives signal of how well the management team will be monitored by BOD. In commercial banks of Nepal, it is usually retired NRB officials are appointed as director. n. Overall image of bank Image of bank has lot to do with the business of bank. Depositors like to save their hard earned money in banks which they can trust. This helps bank to collect deposit at relatively lower cost. This again helps bank to charge lower rate on loans and advances. Thus, good number of borrowers all year round. Moreover, it is seen that customers are willing to pay higher fee to services they take from reputed banks. Also investors give higher value to shares of those banks with good image in the market. Nepal NABIL and Standard Chartered Bank have better goodwill and image thus higher share price. Image of a bank is a major fundamental factor to study for share traders. o. Years of operation With more years in the business come the recognition for banks and also better understanding of the needs of customers. Also, banks with early presence in the market can capture significant market share in terms of deposit collection and loyal customers (depositors and borrowers). Investors also give more priority to old banks when it comes to investing in their shares because they have better understanding of banks management team and its performance so far. Thus, it is one of the important factors for investors to consider while making fundamental analysis of shares of commercial banks.

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Chapter 3 Research Methodology

This chapter deals with the methodology of the study. Research methodology is the overall plan associated with a study. The methodology provides a basic framework on which the study is founded. This chapter is divided into six sections. The first section provides a description of research design used in the study. Second section deals with nature and sources of data with description of sample while third section describes the use of statistical tools for analysis of primary data. The fourth section deals with data collection Procedure and time frame. The variables used in the study and their measurement criteria are described in the fifth section. The sixth section presents analysis plan in detail. And, finally seventh section identifies limitations of the study. In this study, I have used empirical data from primary sources, by conducting a survey among a sample of professional share traders along with small interview with few of them. The questionnaire method is the most common mean of data collection in a survey study. A questionnaire was designed to explore the fact. Questionnaire contains the use of fixed questions which are presented to respondents in the same way, with no variation in question wording, and with mainly pre-coded response choices.

3.1 Research Plan and Design The research design adopted to do this study consists of descriptive statistic measure, inferential analysis through cross tabulation, ANOVA test and chi-square test. Intra-industry factor analysis, intra-company factor analysis show which factors are most important to investors based on mean ranking. The descriptive analysis was presented to describe the characteristics of the respondents. The valid number of respondents was (120) distributed into different categories according to their demographic characteristics. Inferential analysis will test pre-determined hypotheses using ANOVA and chi-square test.

30

This study has been designed around identifying key industry and company factors which investors consider important for fundamental analysis of shares of commercial banks. And testing the relationship between demographic profile of investors and industry and company factor they consider the most for fundamental analysis. This will help to understanding which demographic variables have relationship with choice of factors. The detailed methodological issues are discussed extensively in respective sections of this study.

3.2 Description of the Sample and Sampling technique This study has utilized only primary data. Samples respondents are those who are members of brokerage firms located in Kathmandu. Sample size was determined by taking education level as key variable with 30 samples for each sub-variable. Primary data The study mainly relies on primary source. The survey questionnaire has been used to collect the active traders choice of factors when they do fundamental analysis of stocks of commercial banks. The survey was designed to identify the views of respondents as how they give importance to factors which directly or indirectly influences the return on stocks. A total of 120 questionnaires were distributed among individuals who are registered with brokerage firms located in Kathmandu. The questionnaire consists of one multiple choice single response, one multiple choice multiple response and four rating scale type questions. Research questionnaire is included in Appendix A Population and Sample The population of the study covers all investors, registered with brokerage firms located in Kathmandu, who has had invested in shares of commercial banks of Nepal. The sample includes a total of 120 respondents actively trading in shares of commercial banks. Education level was taken as key variable and accordingly 30 samples were taken for each sub-variable making it altogether 120 samples. All the respondents were selected based on their knowledge of fundamental analysis.
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Sampling technique The sampling technique applied for this research is non-probability sampling technique. Under this technique convenience sampling method was used. Non-probability sampling technique was used because for this study there was no sample frame available. Population under study is unknown and given the limitation of the study it is not possible to visit all the brokerage firms and survey their members. So, brokerage firms that were visited included: Kumari Securities Pvt. Limited, Opal Securities Investment Pvt. Limited, J.F. Securities Company Pvt. Limited, Pragyan Securities Pvt. Limited, Malla &Malla Stock Broking Company Pvt. Limited, ABC Securities Pvt. Limited, Sagarmatha Securities Pvt. Limited The reason behind using convenience sampling method is because this method covers wide area and represents the units even from the heterogeneous population. Also given the limitation of the study this method was most effective in doing researcher administered questionnaire survey within short period of time. The research questionnaire was distributed to total of 120 respondents. These 120 respondents are the professional share traders who are actively trading the shares of commercial banks in NEPSE atleast for past two years. This sample size was determined on the basis of taking education level as key variable. In the education level there are four subvariable (SLC, Intermediate, Bachelor and Master Level and above). 30 samples for each sub-variable were allocated making it altogether sample size of 120.

3.3 Instrumentation Statistical and financial tools are the key for the analysis of numerical data in the most of the researches. In this study, only statistical tool has been used. The suitable statistical tool for this research is ANOVA test analysis and chi-square is used to test some relationships which are found to be significant in other researches. The one way analysis of variance (ANOVA) is an inferential statistical test that allows to testing if any of several sample means are different from each other. So, this study uses ANOVA to see whether the mean ratings given to various factors by sample respondents falling in different age group, education level or income level are significantly different Dependent variable are industry and company factors
32

whereas independent variables are demographic profile of investors (age, educational level and income level). Research Questionnaire has been be shown in Appendix A 3.4 Method of Analysis This section deals with statistical models used in analysis of primary data. The method of data analysis used in the study is divided in two subsections. The first section deals with the descriptive tools used for analysis of primary data. This includes percentage/frequency distribution, cross tabulation, mean ranking scores of responses to industry and company factors. The second section provides analytical analysis of the primary data collected using ANOVA and Chi-square test Method of analysis of primary data The primary data analysis has been carried out on the basis of response derived from questionnaire survey. Frequency or percentage analysis was carried out to find make a clear picture of the composition of respondents in the survey. Similarly, other data which are not included in the main part such as response to question no.6 regarding source of information respondents consider important are also analyzed. Mean value was calculated for both industry and company factor for carrying out ANOVA testing. Moreover, mean is used for identify which factors investors consider most and least important for bullish and bearish market trend.

3.5 Data Collection Procedure and Time Frame Factors considered as important for fundamental analysis of shares of commercial banks were collected using pilot study among 10 share traders of capital market and, finally, a questionnaire was devised in two parts. In the first part, all two variables i.e. (1) industry variable and (3) company variable were divided into several factors and their importance were rated by investors. Industry factors are divided into 4 sub-factor and company factors into 15 sub-factors. In the second part, the factors are prepared by using rating scale. One can answer research questions by analyzing the provided data in this section.

33

Data collection procedure involved collecting the above mentioned data by visiting brokerage firms located in Kathmandu and conducting researcher administered survey among professional and active share traders. For data collection non-probability sampling technique with convenience sampling method was used. Questionnaire was distributed among share traders by filling 30 samples for each sub-variable of education level Time frame for collection of primary data took three weeks. About 20 respondents filled the questionnaire form each day and total of 7 brokerage firms were visited during this three weeks time. List of brokerage firm visited is shown in Appendix B

3.6 Validity and Reliability Validity is the extent to which a test measure what it claims to measure. It is vital for a test to be valid in order for the results to be accurately applied and interpreted. For validity of the study, the structured questionnaires are set from the topic related one and for final distribution of questionnaire; then it was completed and finalized by the suggestions of guide and experts of the research. The responses of the respondents are unbiased because they were not influenced in any ways; neither by researcher or any other persons because all the respondents filled the questionnaire independently. Furthermore, to meet the objective of the study, small interview was conducted among individual investors at the brokerage firm to understand their knowledge regarding fundamental analysis and terms used in research questionnaire. Reliability refers to the consistency of a measure. It also refers to how well it produces results (or, how well it doesnt fail). A test is considered reliable if we get the same result repeatedly. Regarding reliability of the research, the questionnaires were filled up through researcher administered method. This reduced response error to much extent. And to have a more accurate results and relationship between the variables, the questionnaire are cross checked and finalized to eliminate non-sampling error.

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3.7 Overall Analysis Plan The primary data collected will be analyzed using the descriptive and statistical tools that will help to analyze the characteristics of the Nepalese share traders regarding their consideration of fundamental factors. The method used to collect data is survey questionnaire employing non-probability sampling technique with convenience sampling method. For data analysis descriptive and analytical methods are used. Descriptive includes frequency, cross tabulation and mean ranking scores of responses to industry and company factors. Analytical analysis includes Anova and Chi-square testing, intra-industry and intracompany analysis.

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Chapter 4 Results and Discussion

This chapter deals with the presentation and interpretation of the results. It makes use of descriptive and analytical tools to present and analyze the results. This chapter also discusses the types of statistical tests performed and makes inferential analysis of data results and its discussion. Here the purpose of use of given statistical tests is also discussed briefly 4.1 Presentation of Results and Descriptive Analysis 4.1.1 Demographic Factors Analysis a. Age Table 1: Frequency distribution based on age group of respondents Age Group 20 to 30 years 31 to 40 years above 40 years Total Frequency 12 67 41 120 Percent 10.0 55.8 34.2 100.0

From the above table, it can be seen that, of the total sample size of 120, age group of 31 to 40 comprises of highest percentage of respondents i.e. 55.8% followed by age group of above 40 i.e. 34.2% and age group of between 20 to 30 is the lowest i.e. 10% b. Education level Table 2: Frequency distribution based on education level of respondents Education Level SLC Intermediate Bachelor Master Level and above Total Frequency 30 30 30 30 120 Percent 25.0 25.0 25.0 25.0 100.0

36

From the above table, it can be seen that, of the total sample size of 120, frequency of respondents for each education level are equal i.e. 30 and equal percentage of respondents i.e. 25%. This is because sample was collected taking education level as key variable assigning 30 sample size to each sub-group. c. Profession Table 3: Frequency distribution based on profession of respondents Profession Government service Private service Business/Self-employed Student Total Frequency 3 49 49 19 120 Percent 2.5 40.8 40.8 15.8 100.0

From the above table, it can be seen that, of the total sample size of 120, respondents with profession of private service and business/self-employed comprised of highest percentage i.e. 40.8% each, followed by students i.e. 15.8%. Respondents with profession of government service comprised of least percentage i.e. 2.5% d. Average monthly income Table 4: Frequency distribution based on average monthly income of respondents Average monthly income 5,000 to 10,000 10,000 to 20,000 20,000 to 30,000 Above 30,000 Total Frequency 16 50 41 13 120 Percent 13.3 41.7 34.2 10.8 100.0

From the above table, it can be seen that, of the total sample size of 120, respondents with average monthly income of 10,000 to 20,000 comprised of highest percentage i.e. 41.7%, followed with average monthly income of 20,000 to 30,000 i.e. 34.2%, then that of average

37

monthly income of 5,000 to 10,000 i.e. 13.3% and respondents with income level of above 30,000 comprised of least percentage i.e. 10.8%

4.1.2 General information analysis a. Typical investment horizon Table 5: Frequency distribution based on investment horizon of respondents
Investment Horizon Short term (less than 1 year) Mid-term (1-2 years) Long term (more than 2 years) Total Frequency 34 4 82 120 Percent 28.3 3.3 68.3 100

The above table shows that majority of the investors have long investment horizon (>2 years) i.e. 68.3%. Among 20 respondents 28.3% said they invest for short term (<1 year). Only small portion of investors had mid-term (1-2 years) i.e. 3.3% b. Source of information Table 6: Frequency distribution based on response to research report published by individuals and institutions
Response No Yes Total Frequency 88 32 120 Percent 73.3 26.7 100

The above table shows that 73.3% of the respondents do not consider research report published by individuals and institutions as worthy source for making investment while only 26.7% considered it worthy

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Table 7: Frequency distribution based on response to recommendations/suggestions from brokers

Response No Yes Total Frequency 82 38 120 Percent 68.3 31.7 100

The above table shows that 68.3% of the respondents do not consider recommendations/suggestions from brokers as worthy source for making investment while only 31.7% considered it worthy Table 8: Frequency distribution based on response to investment management service providers
Response No Yes Total Frequency 110 10 120 Percent 91.7 8.3 100

The above table shows that 91.3% of the respondents do not consider investment management service providers as worthy source for making investment while only 8.3% considered it worthy Table 9: Frequency distribution based on response to self- research Response Yes Frequency 120 Percent 100

The above table shows that all the 120 respondents i.e. 100% consider self-research as worthy source for making investment. Table 10: Frequency distribution based on response to research web sites
Response No Frequency 96 Percent 80 39

Yes Total

24 120

20 100

The above table shows that 80% of the respondents do not consider research web sites as worthy source for making investment while only 20% considered it worthy Table 11: Frequency distribution based on response to news papers
Response No Yes Total Frequency 94 26 120 Percent 78.33333 21.66667 100

The above table shows that 78.33% of the respondents do not consider newspapers as worthy source for making investment while only 21.66% considered it worthy. Table 12: Frequency distribution based on response to tips from relatives/friends
Response No Yes Total Frequency 76 44 120 Percent 63.33333 36.66667 100

The above table shows that 63.33% of the respondents do not consider tips from relatives/friends as worthy source for making investment while 36.67% considered it worthy. 4.2 Types of Statistical Tests Performed To complete the objective of the research, there were different tests performed in order to find out the conclusions on the data collected. The types of tests performed on the data collected are: Percentage Analysis The percentage analysis is done to find out the general information about the data collected regarding the composition of the respondents in the sample taken. The percentage analysis includes frequency distribution based on demographic profile i.e. age, educational level, profession and average income level of respondents. Other data regarding the investment
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horizon of investors and source of information considered by investors are also included for analysis. The findings are shown in frequency distribution table. Cross tabulation Analysis Cross tabulation is useful in understanding what proportion of investors falling in different age and educational level give importance rating to various industry and company factor based on five scale rating. It also helps to draw snapshot picture of factors importance among investors within various age group and education level Intra-Industry/Company factor Analysis This analysis deals with understanding which intra-industry factors and intra-company factors investors rank highest and lowest under different conditions. Here analysis is done only for those statements where null hypotheses have been rejected (based on below ANOVA test analysis). Following statements are under the intra-industry/company factor analysis:- The Intra-industry factor ranking by different age group of investors when market is bearish, Intra-company factor ranking by different age group of investors with when market is bullish, Intra-company factor ranking by different income level investors when market is bearish. It helps to identify which factors are most important to investors and which are least important.

ANOVA test Analysis of variance (ANOVA) enables us to test for the significance of the differences among more than two sample means. Using analysis of variance, we are able to make inferences about whether our samples are drawn from populations having the same meanRichard I. Levin Here, in this study, the one way analysis of variance (ANOVA) is used as an inferential statistical test to test if any of several means are different from each other. Mean rating for all factors with five rating scale is calculated using SPSS so that it becomes easy to test whether mean rating varies among investors falling in various age group, education level and income level sample respondents. It is used for the test of significance for mean
41

consideration given to industry and company factors between various demographic variables .Anova test statistics has been useful in testing of total of 24 hypotheses testing was done using Anova test.

Chi-square test Chi-square test allows us to do a lot more than just test for equality of several proportions. If we classify a population into several categories with respect to two attributes, we can then use chi-square test to determine whether the two attributes are independent of each otherDavid S. Rubin This study uses Chi-square test to measure the association between independent variable. It is also used here to see whether given demographic variable and factor under consideration are independent of each other. Only key industry and company variables are chosen for testing association so that to draw conclusion on whether or not Nepalese investors choice of factors are influenced by their age, education and income level. A total of 12 hypotheses are tested for analysis.

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4.3 Inferential Analysis and Discussion 4.3.1 Cross tabulation Analysis 4.3.1.1 Cross tabulation between Age group of investors and Ideology of political party in government factor considered Table 13: Cross tabulation between Age group of investors and Ideology of political party in government factor considered while making fundamental analysis of shares of commercial banks
Ideology of political party in government Age group
20 to 30 years 31 to 40 years above 40 years Count % within Age Count % within Age Count % within Age Count % within Age

least considered
0 0.00% 4 6.00% 1 2.40% 5 4.20%

moderately considered
1 8.30% 11 16.40% 9 22.00% 21 17.50%

considered
6 50.00% 22 32.80% 13 31.70% 41 34.20%

highly considered
4 33.30% 24 35.80% 12 29.30% 40 33.30%

utmost considered
1 8.30% 6 9.00% 6 14.60% 13 10.80%

Total
12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

Total

The above table shows that 50% of the respondents under the age group of 20 to 30 years thought ideology of political party in government as considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 35.80% of the respondents under the age group of 31 to 40 years thought this factor as highly considerable while only 6% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 31.70% of the respondents thought this factor as considerable while only 2.40% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks

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4.3.1.2 Cross tabulation between Age group of investors and Impact of regulation & policies factor considered Table 14: Cross tabulation between Age group of investors and Impact of regulation & policies factor considered while making fundamental analysis of shares of commercial banks
Impact of regulation & policies Age group
20 to 30 years Age 31 to 40 years above 40 years Total Count % within Age Count % within Age Count % within Age Count % within Age moderately considered 1 8.30% 13 19.40% 14 34.10% 28 23.30% considered 5 41.70% 30 44.80% 12 29.30% 47 39.20% highly considered 6 50.00% 14 20.90% 11 26.80% 31 25.80% utmost considered 0 0.00% 10 14.90% 4 9.80% 14 11.70% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

The above table shows that 50% of the respondents under the age group of 20 to 30 years thought impact of regulation & policies as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 44.80% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only 14.90% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 34.10% of the respondents thought this factor as least considerable while only 2.40% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

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4.3.1.3 Cross tabulation between Age group of investors and Corporate governance factor considered Table 15: Cross tabulation between Age group of investors and Corporate governance factor considered while making fundamental analysis of shares of commercial banks
Corporate governance Age group
20 to 30 years A ge 31 to 40 years above 40 years Total Count % within Age Count % within Age Count % within Age Count % within Age least considere d 0 0.00% 4 6.00% 1 2.40% 5 4.20% moderately considered 1 8.30% 10 14.90% 2 4.90% 13 10.80% considered 3 25.00% 25 37.30% 15 36.60% 43 35.80% highly considered 7 58.30% 17 25.40% 20 48.80% 44 36.70% utmost considered 1 8.30% 11 16.40% 3 7.30% 15 12.50% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

The above table shows that 58.30% of the respondents under the age group of 20 to 30 years thought corporate governance as highly considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 37.30% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only 6% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 48.80% of the respondents thought this factor as highly considerable while only 2.40% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks

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4.3.1.4 Cross tabulation between Age group of investors and Liquidity position factor considered Table 16: Cross tabulation between Age group of investors and Liquidity position factor considered while making fundamental analysis of shares of commercial banks
Liquidity position Age group
20 to 30 years 31 to 40 years above 40 years Count % within Age Count % within Age Count % within Age Count % within Age moderately considered 1 8.30% 1 1.50% 2 4.90% 4 3.30% considered 3 25.00% 19 28.40% 11 26.80% 33 27.50% highly considered 4 33.30% 32 47.80% 20 48.80% 56 46.70% utmost considered 4 33.30% 15 22.40% 8 19.50% 27 22.50% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

Total

The above table shows that 33.30% of the respondents under the age group of 20 to 30 years thought liquidity position as highly considerable while 8.30% of them thought this factor to be moderately considerable for fundamental analysis of shares of commercial banks. 47.80% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only 6% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 48.80% of the respondents thought this factor as highly considerable while only 1.50% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks

4.3.1.5 Cross tabulation between Age group of investors and Capital adequacy factor considered Table 17: Cross tabulation between Age group of investors and Capital adequacy factor considered while making fundamental analysis of shares of commercial banks
Capital adequacy Age group 20 to 30 years Age 31 to 40 years above 40 years Total Count % within Age Count % within Age Count % within Age Count % within Age least considered 0 0.00% 5 7.50% 0 0.00% 5 4.20% moderately considered 5 41.70% 37 55.20% 17 41.50% 59 49.20% considered 5 41.70% 21 31.30% 21 51.20% 47 39.20% highly considered 2 16.70% 4 6.00% 2 4.90% 8 6.70% utmost considered 0 0.00% 0 0.00% 1 2.40% 1 0.80% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

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The above table shows that 41.70% of the respondents under the age group of 20 to 30 years thought capital adequacy as moderately considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 55.20% of the respondents under the age group of 31 to 40 years thought this factor as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 51.20% of the respondents thought this factor as considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks 4.3.1.6 Cross tabulation between Age group of investors and Earning per share factor considered Table 18: Cross tabulation between Age group of investors and Earning per share factor considered while making fundamental analysis of shares of commercial banks
Earning per share Age group
20 to 30 years Count % within Age Count % within Age Count % within Age Count % within Age least considered 1 8.30% 2 3.00% 3 7.30% 6 5.00% moderately considered 5 41.70% 25 37.30% 17 41.50% 47 39.20% considered 4 33.30% 28 41.80% 13 31.70% 45 37.50% highly considered 2 16.70% 8 11.90% 8 19.50% 18 15.00% utmost considered 0 0.00% 4 6.00% 0 0.00% 4 3.30% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

31 to 40 years

above 40 years

Total

The above table shows that 41.70% of the respondents under the age group of 20 to 30 years thought earning per share as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 37.30% of the respondents under the age group of 31 to 40 years thought this factor as considerable while 3% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 41.50% of the
47

respondents thought this factor as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

4.3.1.7 Cross tabulation between Age group of investors and Interest spread factor considered Table 19: Cross tabulation between Age group of investors and Interest spread factor considered while making fundamental analysis of shares of commercial banks
Interest spread Age group
20 to 30 years Age 31 to 40 years above 40 years Total Count % within Age Count % within Age Count % within Age Count % within Age least considered 3 25.00% 6 9.00% 4 9.80% 13 10.80% moderately considered 7 58.30% 36 53.70% 22 53.70% 65 54.20% considered 2 16.70% 23 34.30% 15 36.60% 40 33.30% highly considered 0 0.00% 2 3.00% 0 0.00% 2 1.70% Total

12 100.00% 67 100.00% 41 100.00% 120 100.00%

The above table shows that 58.30% of the respondents under the age group of 20 to 30 years thought interest spread as moderately considerable while none of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. 53.70% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only 3% of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 53.70% of the respondents thought this factor as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

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4.3.1.8 Cross tabulation between Age group of investors and Cost of fund factor considered Table 20: Cross tabulation between Age group of investors and Cost of fund factor considered while making fundamental analysis of shares of commercial banks
Cost of fund Age group
20 to 30 years Age 31 to 40 years above 40 years Total Count % within Age Count % within Age Count % within Age Count % within Age least considered 0 0.00% 4 6.00% 1 2.40% 5 4.20% moderately considered 7 58.30% 36 53.70% 15 36.60% 58 48.30% considered 5 41.70% 24 35.80% 23 56.10% 52 43.30% highly considered 0 0.00% 3 4.50% 2 4.90% 5 4.20% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

The above table shows that 58.30% of the respondents under the age group of 20 to 30 years thought cost of fund as moderately considerable while none of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. 53.70% of the respondents under the age group of 31 to 40 years thought this factor as moderately considerable while only 4.50% of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 56.10% of the respondents thought this factor as considerable while only 2.40% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks

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4.3.1.9 Cross tabulation between Age group of investors and Profitability factor considered Table 21: Cross tabulation between Age group of investors and Profitability factor considered while making fundamental analysis of shares of commercial banks
Profitability Age group
20 to 30 years Age 31 to 40 years above 40 years Total Count % within Age Count % within Age Count % within Age Count % within Age moderately considered 2 16.70% 11 16.40% 7 17.10% 20 16.70% considered 5 41.70% 19 28.40% 16 39.00% 40 33.30% highly considered 4 33.30% 27 40.30% 17 41.50% 48 40.00% utmost considered 1 8.30% 10 14.90% 1 2.40% 12 10.00% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

The above table shows that 41.70% of the respondents under the age group of 20 to 30 years thought profitability as considerable while 8.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 40.30% of the respondents under the age group of 31 to 40 years thought this factor as highly considerable while only 14.90% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 41.50% of the respondents thought this factor as highly considerable while only 2.40% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

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4.3.1.10 Cross tabulation between Age group of investors and Loan portfolio size factor considered Table 22: Cross tabulation between Age group of investors and Loan portfolio size factor considered while making fundamental analysis of shares of commercial banks

Loan portfolio size Age group

20 to 30 years Count % within Age Count % within Age Count % within Age Count % within Age least considered 1 8.30% 3 4.50% 4 9.80% 8 6.70% moderately considered 5 41.70% 29 43.30% 15 36.60% 49 40.80% considered 6 50.00% 31 46.30% 18 43.90% 55 45.80% highly considered 0 0.00% 4 6.00% 3 7.30% 7 5.80% utmost considered 0 0.00% 0 0.00% 1 2.40% 1 0.80% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

31 to 40 years

above 40 years

Total

The above table shows that 50% of the respondents under the age group of 20 to 30 years thought loan portfolio size as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 46.30% of the respondents under the age group of 31 to 40 years thought this factor as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 43.90% of the respondents thought this factor as considerable while only 2.40% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

51

4.3.1.11 Cross tabulation between Age group of investors and Loan loss provision factor considered Table 23: Cross tabulation between Age group of investors and Loan loss provision factor considered while making fundamental analysis of shares of commercial banks
Loan loss provision Age group
20 to 30 years Count % within Age Count % within Age Count % within Age Count % within Age least considered 0 0.00% 1 1.50% 1 2.40% 2 1.70% moderately considered 6 50.00% 21 31.30% 12 29.30% 39 32.50% considered 5 41.70% 32 47.80% 18 43.90% 55 45.80% highly considered 1 8.30% 11 16.40% 5 12.20% 17 14.20% utmost considered 0 0.00% 2 3.00% 5 12.20% 7 5.80% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

31 to 40 years

above 40 years

Total

The above table shows that 50% of the respondents under the age group of 20 to 30 years thought loan loss provision as moderately considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 47.80% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only 1.50% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 43.90% of the respondents thought this factor as considerable while only 2.40% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks

52

4.3.1.12 Cross tabulation between Age group of investors and Dividend history factor considered Table 24: Cross tabulation between Age group of investors and Dividend history factor considered while making fundamental analysis of shares of commercial banks
Dividend history Age group
20 to 30 years Count % within Age Count % within Age Count % within Age Count % within Age least considered 0 0.00% 5 7.50% 1 2.40% 6 5.00% moderately considered 4 33.30% 26 38.80% 22 53.70% 52 43.30% considered 6 50.00% 29 43.30% 14 34.10% 49 40.80% highly considered 2 16.70% 6 9.00% 4 9.80% 12 10.00% utmost considered 0 0.00% 1 1.50% 0 0.00% 1 0.80% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

31 to 40 years above 40 years

Total

The above table shows that 50% of the respondents under the age group of 20 to 30 years thought dividend history as considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 43.30% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only 1.50% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 53.70% of the respondents thought this factor as moderately considerable while only 2.40% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks

53

4.3.1.13 Cross tabulation between Age group of investors and Size of deposit factor considered Table 25: Cross tabulation between Age group of investors and Size of deposit factor considered while making fundamental analysis of shares of commercial banks
Size of deposit Age group
20 to 30 years Count % within Age Count % within Age Count % within Age Count % within Age least considered 2 16.70% 10 14.90% 6 14.60% 18 15.00% moderately considered 3 25.00% 22 32.80% 14 34.10% 39 32.50% considered 7 58.30% 29 43.30% 19 46.30% 55 45.80% highly considered 0 0.00% 6 9.00% 1 2.40% 7 5.80% utmost considered 0 0.00% 0 0.00% 1 2.40% 1 0.80% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

31 to 40 years above 40 years

Total

The above table shows that 58.30% of the respondents under the age group of 20 to 30 years thought size of deposit as considerable while none of them thought this factor to be considerable for fundamental analysis of shares of commercial banks. 43.30% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 46.30% of the respondents thought this factor as considerable while only 2.40% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

54

4.3.1.14 Cross tabulation between Age group of investors and Non-performing loan factor considered Table 26: Cross tabulation between Age group of investors and Non-performing loan factor considered while making fundamental analysis of shares of commercial banks
Non-performing loan Age group
20 to 30 years Count % within Age Count % within Age Count % within Age Count % within Age least considered 0 0.00% 2 3.00% 2 4.90% 4 3.30% moderately considered 0 0.00% 28 41.80% 19 46.30% 47 39.20% considered 7 58.30% 22 32.80% 13 31.70% 42 35.00% highly considered 4 33.30% 10 14.90% 6 14.60% 20 16.70% utmost considered 1 8.30% 5 7.50% 1 2.40% 7 5.80% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

31 to 40 years above 40 years

Total

The above table shows that 58.30% of the respondents under the age group of 20 to 30 years thought non-performing loan as considerable while none of them thought this factor to be moderately considerable for fundamental analysis of shares of commercial banks. 41.80% of the respondents under the age group of 31 to 40 years thought this factor as moderately considerable while only 3% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 46.30% of the respondents thought this factor as moderately considerable while only 2.40% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

55

4.3.1.15 Cross tabulation between Age group of investors and Number of branches factor considered Table 27: Cross tabulation between Age group of investors and Number of branches factor considered while making fundamental analysis of shares of commercial banks

Number of branches Age group

20 to 30 years Age 31 to 40 years above 40 years Total Count % within Age Count % within Age Count % within Age Count % within Age least considered 3 25.00% 8 11.90% 5 12.20% 16 13.30% moderately considered 6 50.00% 31 46.30% 14 34.10% 51 42.50% considered 2 16.70% 24 35.80% 18 43.90% 44 36.70% highly considered 1 8.30% 4 6.00% 4 9.80% 9 7.50% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

The above table shows that 50% of the respondents under the age group of 20 to 30 years thought number of branches as moderately considerable while 8.30% of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. 46.30% of the respondents under the age group of 31 to 40 years thought this factor as moderately considerable while only 6% of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 43.90% of the respondents thought this factor as considerable while only 9.80% of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks

56

4.3.1.16 Cross tabulation between Age group of investors and Management team factor considered Table 28: Cross tabulation between Age group of investors and Management team factor considered while making fundamental analysis of share commercial banks
Management team Age group
least considered Age 20 to 30 years Count % within Age 31 to 40 years Count % within Age above 40 years Count % within Age Total Count % within Age 1 8.3% 4 6.0% 4 9.8% 9 7.5% moderately considered 1 8.3% 16 23.9% 8 19.5% 25 20.8% considered 4 33.3% 25 37.3% 22 53.7% 51 42.5% highly considered 5 41.7% 19 28.4% 4 9.8% 28 23.3% utmost considered 1 Total 12

8.3% 100.0% 3 67

4.5% 100.0% 3 41

7.3% 100.0% 7 120

5.8% 100.0%

The above table shows that 41.7% of the respondents under the age group of 20 to 30 years thought management team as highly considerable while 8.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 37.30% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only 4.5% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 53.70% of the respondents thought this factor as considerable while only 7.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

57

4.3.1.17 Cross tabulation between Age group of investors and Directors in Board factor considered Table 29: Cross tabulation between Age group of investors and Directors in Board factor considered while making fundamental analysis of shares of commercial banks
Directors in Board Age group
20 to 30 years Age 31 to 40 years above 40 years Total Count % within Age Count % within Age Count % within Age Count % within Age moderately considered 5 41.70% 14 20.90% 12 29.30% 31 25.80% considered 4 33.30% 22 32.80% 15 36.60% 41 34.20% highly considered 3 25.00% 27 40.30% 11 26.80% 41 34.20% utmost considered 0 0.00% 4 6.00% 3 7.30% 7 5.80% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

The above table shows that 41.7% of the respondents under the age group of 20 to 30 years thought directors in board as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 40.30% of the respondents under the age group of 31 to 40 years thought this factor as highly considerable while only 6% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 36.60% of the respondents thought this factor as considerable while only 7.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

58

4.3.1.18 Cross tabulation between Age group of investors and Overall image of bank/brand name factor considered Table 30: Cross tabulation between Age group of investors and Overall image of bank/brand name factor considered while making fundamental analysis of shares of commercial banks
Overall image of bank/brand name Age group
20 to 30 years 31 to 40 years above 40 years Count % within Age Count % within Age Count % within Age Count % within Age moderately considered 2 16.70% 18 26.90% 13 31.70% 33 27.50% considered 5 41.70% 28 41.80% 21 51.20% 54 45.00% highly considered 3 25.00% 18 26.90% 6 14.60% 27 22.50% utmost considered 2 16.70% 3 4.50% 1 2.40% 6 5.00% Total

12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

Total

The above table shows that 41.7% of the respondents under the age group of 20 to 30 years thought overall image of bank/brand name as considerable while 16.70% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 41.80% of the respondents under the age group of 31 to 40 years thought this factor as considerable while only 4.50% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 51.20% of the respondents thought this factor as considerable while only 2.40% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks

59

4.3.1.19 Cross tabulation between Age group of investors and Years of operation factor considered Table 31: Cross tabulation between Age group of investors and Years of operation factor considered while making fundamental analysis of shares of commercial banks
Years of operation Age group
20 to 30 years 31 to 40 years above 40 years Count % within Age Count % within Age Count % within Age Count % within Age least considered 0 0.00% 10 14.90% 5 12.20% 15 12.50% moderately considered 8 66.70% 34 50.70% 15 36.60% 57 47.50% considered 3 25.00% 19 28.40% 20 48.80% 42 35.00% highly considered 1 8.30% 3 4.50% 0 0.00% 4 3.30% utmost considered 0 0.00% 1 1.50% 1 2.40% 2 1.70% Total 12 100.00% 67 100.00% 41 100.00% 120 100.00%

Age

Total

The above table shows that 66.70% of the respondents under the age group of 20 to 30 years thought years of operation as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 50.70% of the respondents under the age group of 31 to 40 years thought this factor as moderately considerable while only 1.50% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the age group of above 40 years, 48.80% of the respondents thought this factor as considerable while only none of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks

60

4.3.1.20 Cross tabulation between Education Level of investors and Ideology of political party in government factor considered Table 32: Cross tabulation between Education Level of investors and Ideology of political party in government factor considered while making fundamental analysis of shares of commercial banks
Ideology of political party in government Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 1 3.30% 1 3.30% 2 6.70% 1 3.30% 5 4.20% moderately considered 4 13.30% 8 26.70% 6 20.00% 3 10.00% 21 17.50% considered 10 33.30% 10 33.30% 11 36.70% 10 33.30% 41 34.20% highly considered 9 30.00% 8 26.70% 9 30.00% 14 46.70% 40 33.30% utmost considered 6 20.00% 3 10.00% 2 6.70% 2 6.70% 13 10.80% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 33.30% of the respondents with education level of SLC thought ideology of political party in government as considerable while 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 33.30 % of the respondents under intermediate level thought this factor as considerable while only 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 36.70% of the respondents thought this factor as considerable while only 6.70% of them thought this factor to be least and utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 46.70% of the respondents thought this factor to be highly considerable while only 3.30% of them thought this factor to be least considerable for the fundamental analysis of shares of commercial banks.

61

4.3.1.21Cross tabulation between Education Level of investors and Impact of regulation & policies factor considered Table 33: Cross tabulation between Education Level of investors and Impact of regulation & policies factor considered while making fundamental analysis of shares of commercial banks
Impact of regulation & policies Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level moderately considered 5 16.70% 6 20.00% 9 30.00% 8 26.70% 28 23.30% considered 13 43.30% 11 36.70% 9 30.00% 14 46.70% 47 39.20% highly considered 6 20.00% 10 33.30% 8 26.70% 7 23.30% 31 25.80% utmost considered 6 20.00% 3 10.00% 4 13.30% 1 3.30% 14 11.70% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 43.30% of the respondents with education level of SLC thought impact of regulation & policies as considerable while 16.70% of them thought this factor to be moderately considerable for fundamental analysis of shares of commercial banks. 36.70 % of the respondents under intermediate level thought this factor as considerable while only 10% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 30% of the respondents thought this factor as moderately considerable while only 13.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 46.70% of the respondents thought this factor to be considerable while only 3.30% of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

62

4.3.1.22 Cross tabulation between Education Level of investors and Corporate governance factor considered Table 34: Cross tabulation between Education Level of investors and Corporate governance factor considered while making fundamental analysis of shares of commercial banks
Corporate governance Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 1 3.30% 1 3.30% 1 3.30% 2 6.70% 5 4.20% moderately considered 6 20.00% 2 6.70% 2 6.70% 3 10.00% 13 10.80% considered 10 33.30% 10 33.30% 11 36.70% 12 40.00% 43 35.80% highly considered 10 33.30% 15 50.00% 11 36.70% 8 26.70% 44 36.70% utmost considered 3 10.00% 2 6.70% 5 16.70% 5 16.70% 15 12.50% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 33.30% of the respondents with education level of SLC thought corporate governance as considerable while 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 50 % of the respondents under intermediate level thought this factor as highly considerable while only 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 36.70% of the respondents thought this factor as highly considerable while only 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the master and above level 40% of the respondents thought this factor to be considerable while only 6.70% of them thought this factor to be least considerable for the fundamental analysis of shares of commercial banks.

63

4.3.1.23 Cross tabulation between Education Level of investors and Liquidity position factor considered Table 35: Cross tabulation between Education Level of investors and Liquidity position factor considered while making fundamental analysis of shares of commercial banks
Liquidity position Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level moderately considered 0 0.00% 2 6.70% 2 6.70% 0 0.00% 4 3.30% considered 9 30.00% 8 26.70% 7 23.30% 9 30.00% 33 27.50% highly considered 16 53.30% 12 40.00% 12 40.00% 16 53.30% 56 46.70% utmost considered 5 16.70% 8 26.70% 9 30.00% 5 16.70% 27 22.50% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 53.30% of the respondents with education level of SLC thought liquidity position as highly considerable while none of them thought this factor to be moderately considerable for fundamental analysis of shares of commercial banks. 40% of the respondents under intermediate level thought this factor as highly considerable while only 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 36.70% of the respondents thought this factor as considerable while only 6.70% of them thought this factor to be moderately considerable for fundamental analysis of shares of commercial banks. And under the master and above level 53.30% of the respondents thought this factor to be highly considerable while only none of them thought this factor to be moderately considerable for the fundamental analysis of shares of commercial banks.

64

4.3.1.24 Cross tabulation between Education Level of investors and Capital adequacy factor considered Table 36: Cross tabulation between Education Level of investors and Capital adequacy factor considered while making fundamental analysis of shares of commercial banks
Capital adequacy Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 3 10.00% 0 0.00% 0 0.00% 2 6.70% 5 4.20% moderately considered 11 36.70% 17 56.70% 16 53.30% 15 50.00% 59 49.20% considered 11 36.70% 11 36.70% 13 43.30% 12 40.00% 47 39.20% highly considered 5 16.70% 2 6.70% 0 0.00% 1 3.30% 8 6.70% utmost considered 0 0.00% 0 0.00% 1 3.30% 0 0.00% 1 0.80% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 36.70 % of the respondents with education level of SLC thought capital adequacy as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 56.70% of the respondents under intermediate level thought this factor as moderately considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 53.30% of the respondents thought this factor as moderately considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the master and above level 50% of the respondents thought this factor to be moderately considerable while only none of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

65

4.3.1.25 Cross tabulation between Education Level of investors and Earning per share factor considered Table 37: Cross tabulation between Education Level of investors and Earning per share factor considered while making fundamental analysis of shares of commercial banks
Earning per share Educatio n Level
SLC Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level least considere d 1 3.30% 1 3.30% 1 3.30% 3 10.00% 6 5.00% moderatel y considered 15 50.00% 10 33.30% 12 40.00% 10 33.30% 47 39.20% considere d 9 30.00% 12 40.00% 13 43.30% 11 36.70% 45 37.50% highly considere d 4 13.30% 6 20.00% 3 10.00% 5 16.70% 18 15.00% utmost considere d 1 3.30% 1 3.30% 1 3.30% 1 3.30% 4 3.30% Total 30 100.00 % 30 100.00 % 30 100.00 % 30 100.00 % 120 100.00 %

Intermediate Educatio n Level Bachelor

Master Level and above

Total

The above table shows that 50 % of the respondents with education level of SLC thought earning per share as moderately considerable while 3.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 40% of the respondents under intermediate level thought this factor as considerable while only 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 40% of the respondents thought this factor as moderately considerable while 3.30% of them thought this factor to be least and utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 36.70% of the respondents thought this factor to be considerable while only 3.30% of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

66

4.3.1.26 Cross tabulation between Education Level of investors and Interest spread factor considered Table 38: Cross tabulation between Education Level of investors and Interest spread factor considered while making fundamental analysis of shares of commercial banks
Interest spread Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 2 6.70% 7 23.30% 2 6.70% 2 6.70% 13 10.80% moderately considered 14 46.70% 13 43.30% 17 56.70% 21 70.00% 65 54.20% considered 13 43.30% 10 33.30% 11 36.70% 6 20.00% 40 33.30% highly considered 1 3.30% 0 0.00% 0 0.00% 1 3.30% 2 1.70% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 46.70 % of the respondents with education level of SLC thought interest spread as considerable while 3.30% of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. 43.30% of the respondents under intermediate level thought this factor as moderately considerable while none of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 36.70% of the respondents thought this factor as considerable while none of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. And under the master and above level 70% of the respondents thought this factor to be moderately considerable while only 3.30% of them thought this factor to be highly considerable for the fundamental analysis of shares of commercial banks.

67

4.3.1.27 Cross tabulation between Education Level of investors and Cost of fund factor considered for fundamental analysis of shares of commercial banks Table 39: Cross tabulation between Education Level of investors and Cost of fund factor considered while making fundamental analysis of shares of commercial banks
Cost of fund Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 1 3.30% 3 10.00% 0 0.00% 1 3.30% 5 4.20% moderately considered 17 56.70% 10 33.30% 19 63.30% 12 40.00% 58 48.30% considered 12 40.00% 16 53.30% 9 30.00% 15 50.00% 52 43.30% highly considered 0 0.00% 1 3.30% 2 6.70% 2 6.70% 5 4.20% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 56.70 % of the respondents with education level of SLC thought cost of fundas moderately considerable while none of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. 53.30% of the respondents under intermediate level thought this factor as considerable while 3.30% of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 63.30% of the respondents thought this factor as moderately considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the master and above level 50% of the respondents thought this factor to be considerable while only 3.30% of them thought this factor to be least considerable for the fundamental analysis of shares of commercial banks.

68

4.3.1.28 Cross tabulation between Education Level of investors and Profitability factor considered Table 40: Cross tabulation between Education Level of investors and Profitability factor considered while making fundamental analysis of shares of commercial banks
Profitability Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level moderately considered 2 6.70% 4 13.30% 7 23.30% 7 23.30% 20 16.70% considered 10 33.30% 12 40.00% 12 40.00% 6 20.00% 40 33.30% highly considered 13 43.30% 13 43.30% 9 30.00% 13 43.30% 48 40.00% utmost considered 5 16.70% 1 3.30% 2 6.70% 4 13.30% 12 10.00% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 43.30 % of the respondents with education level of SLC thought profitability as highly considerable while 6.70% of them thought this factor to be moderately considerable for fundamental analysis of shares of commercial banks. 43.30% of the respondents under intermediate level thought this factor as highly considerable while 3.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 40% of the respondents thought this factor as considerable while 6.70% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 43.30% of the respondents thought this factor to be highly considerable while only 13.30% of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

69

4.3.1.29 Cross tabulation between Education Level of investors and Loan portfolio size factor considered Table 41: Cross tabulation between Education Level of investors and Loan portfolio size factor considered while making fundamental analysis of shares of commercial banks Loan portfolio size
Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 1 3.30% 4 13.30% 2 6.70% 1 3.30% 8 6.70% moderately considered 12 40.00% 8 26.70% 14 46.70% 15 50.00% 49 40.80% considered 14 46.70% 15 50.00% 13 43.30% 13 43.30% 55 45.80% highly considered 3 10.00% 3 10.00% 0 0.00% 1 3.30% 7 5.80% utmost considered 0 0.00% 0 0.00% 1 3.30% 0 0.00% 1 0.80% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 46.70 % of the respondents with education level of SLC thought loan portfolio size as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 50% of the respondents under intermediate level thought this factor as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 46.70% of the respondents thought this factor as moderately considerable while none of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. And under the master and above level 50% of the respondents thought this factor to be moderately considerable while none them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

70

4.3.1.30 Cross tabulation between Education Level of investors and Loan loss provision factor considered Table 42: Cross tabulation between Education Level of investors and Loan loss provision factor considered while making fundamental analysis of shares of commercial banks
Loan loss size Educatio n Level
SLC Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level least considere d 0 0.00% 1 3.30% 0 0.00% 1 3.30% 2 1.70% moderatel y considered 12 40.00% 6 20.00% 12 40.00% 9 30.00% 39 32.50% considere d 12 40.00% 15 50.00% 15 50.00% 13 43.30% 55 45.80% highly considere d 3 10.00% 5 16.70% 3 10.00% 6 20.00% 17 14.20% utmost considere d 3 10.00% 3 10.00% 0 0.00% 1 3.30% 7 5.80% Total 30 100.00 % 30 100.00 % 30 100.00 % 30 100.00 % 120 100.00 %

Intermediate Educatio n Level Bachelor

Master Level and above

Total

The above table shows that 40 % of the respondents with education level of SLC thought loan loss provision as moderately considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 50% of the respondents under intermediate level thought this factor as considerable while 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 50% of the respondents thought this factor as considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the master and above level 43.30% of the respondents thought this factor to be considerable while only 3.30% of them thought this factor to be least considerable for the fundamental analysis of shares of commercial banks.

71

4.3.1.31 Cross tabulation between Education Level of investors and Dividend history factor considered Table 43: Cross tabulation between Education Level of investors and Dividend history factor considered while making fundamental analysis of shares of commercial banks
Dividend history Educatio n Level
SLC Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level Count % within Educatio n Level least considere d 1 3.30% 3 10.00% 1 3.30% 1 3.30% 6 5.00% moderatel y considered 13 43.30% 14 46.70% 14 46.70% 11 36.70% 52 43.30% considere d 14 46.70% 10 33.30% 13 43.30% 12 40.00% 49 40.80% highly considere d 2 6.70% 2 6.70% 2 6.70% 6 20.00% 12 10.00% utmost considere d 0 0.00% 1 3.30% 0 0.00% 0 0.00% 1 0.80% Total 30 100.00 % 30 100.00 % 30 100.00 % 30 100.00 % 120 100.00 %

Intermediate Educatio n Level Bachelor

Master Level and above

Total

The above table shows that 46.70 % of the respondents with education level of SLC thought dividend historyas considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 46.70% of the respondents under intermediate level thought this factor as moderately considerable while 3.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 46.70% of the respondents thought this factor as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 40% of the respondents thought this factor to be considerable while none of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

72

4.3.1.32 Cross tabulation between Education Level of investors and Size of deposit factor considered Table 44: Cross tabulation between Education Level of investors and Size of deposit factor considered while making fundamental analysis of shares of commercial banks
Size of deposit Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 2 6.70% 3 10.00% 5 16.70% 8 26.70% 18 15.00% moderately considered 15 50.00% 10 33.30% 8 26.70% 6 20.00% 39 32.50% considered 13 43.30% 14 46.70% 15 50.00% 13 43.30% 55 45.80% highly considered 0 0.00% 3 10.00% 2 6.70% 2 6.70% 7 5.80% utmost considered 0 0.00% 0 0.00% 0 0.00% 1 3.30% 1 0.80% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 50 % of the respondents with education level of SLC thought size of deposit as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 46.70% of the respondents under intermediate level thought this factor as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 50% of the respondents thought this factor as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 43.30% of the respondents thought this factor to be considerable while 3.30% of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

73

4.3.1.33 Cross tabulation between Education Level of investors and Non-performing loan factor considered Table 45: Cross tabulation between Education Level of investors and Non-performing loan factor considered while making fundamental analysis of shares of commercial banks
Non-performing loan Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 1 3.30% 1 3.30% 0 0.00% 2 6.70% 4 3.30% moderately considered 14 46.70% 11 36.70% 14 46.70% 8 26.70% 47 39.20% considered 8 26.70% 13 43.30% 11 36.70% 10 33.30% 42 35.00% highly considered 4 13.30% 5 16.70% 4 13.30% 7 23.30% 20 16.70% utmost considered 3 10.00% 0 0.00% 1 3.30% 3 10.00% 7 5.80% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 46.70 % of the respondents with education level of SLC thought non-performing loan as moderately considerable while 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 43.30% of the respondents under intermediate level thought this factor as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 46.70% of the respondents thought this factor as moderately considerable while none of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. And under the master and above level 33.30% of the respondents thought this factor to be considerable while only 6.70% of them thought this factor to be least considerable for the fundamental analysis of shares of commercial banks.

74

4.3.1.34 Cross tabulation between Education Level of investors and Number of branches factor considered Table 46: Cross tabulation between Education Level of investors and Number of branches factor considered while making fundamental analysis of shares of commercial banks
Number of branches Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 5 16.70% 4 13.30% 5 16.70% 2 6.70% 16 13.30% moderately considered 11 36.70% 14 46.70% 13 43.30% 13 43.30% 51 42.50% considered 11 36.70% 11 36.70% 10 33.30% 12 40.00% 44 36.70% highly considered 3 10.00% 1 3.30% 2 6.70% 3 10.00% 9 7.50% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 36.70 % of the respondents with education level of SLC thought number of branches as moderately considerable while 10% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 46.70% of the respondents under intermediate level thought this factor as moderately considerable while 3.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 43.30% of the respondents thought this factor as moderately considerable while 6.70% of them thought this factor to be highly considerable for fundamental analysis of shares of commercial banks. And under the master and above level 43.30% of the respondents thought this factor to be moderately considerable while only 6.70% of them thought this factor to be least considerable for the fundamental analysis of shares of commercial banks.

75

4.3.1.35 Cross tabulation between Education Level of investors and Management team factor considered Table 47: Cross tabulation between Education Level of investors and Management team factor considered while making fundamental analysis of shares of commercial banks
Management team Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 1 3.30% 1 3.30% 4 13.30% 3 10.00% 9 7.50% moderately considered 6 20.00% 7 23.30% 4 13.30% 8 26.70% 25 20.80% considered 13 43.30% 11 36.70% 15 50.00% 12 40.00% 51 42.50% highly considered 8 26.70% 9 30.00% 4 13.30% 7 23.30% 28 23.30% utmost considered 2 6.70% 2 6.70% 3 10.00% 0 0.00% 7 5.80% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 43.30 % of the respondents with education level of SLC thought management team as considerable while 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. 36.70% of the respondents under intermediate level thought this factor as considerable while 3.30% of them thought this factor to be least considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 50% of the respondents thought this factor as considerable while 10% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 40% of the respondents thought this factor to be considerable while none of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

76

4.3.1.36 Cross tabulation between Education Level of investors and Directors in Board factor considered Table 48: Cross tabulation between Education Level of investors and Directors in Board factor considered while making fundamental analysis of shares of commercial banks
Directors in Board Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level moderately considered 6 20.00% 7 23.30% 9 30.00% 9 30.00% 31 25.80% considered 8 26.70% 10 33.30% 11 36.70% 12 40.00% 41 34.20% highly considered 14 46.70% 11 36.70% 9 30.00% 7 23.30% 41 34.20% utmost considered 2 6.70% 2 6.70% 1 3.30% 2 6.70% 7 5.80% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 46.70 % of the respondents with education level of SLC thought Directors in Board as highly considerable while 6.70% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 36.70% of the respondents under intermediate level thought this factor as highly considerable while 6.70% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 36.70% of the respondents thought this factor as considerable while 3.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 40% of the respondents thought this factor to be considerable while 6.70% of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

77

4.3.1.37 Cross tabulation between Education Level of investors and Overall image of bank/brand name factor considered Table 49: Cross tabulation between Education Level of investors and Overall image of bank/brand name factor considered while making fundamental analysis of shares of commercial banks
Overall image of bank/brand name Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level moderately considered 11 36.70% 7 23.30% 8 26.70% 7 23.30% 33 27.50% considered 14 46.70% 13 43.30% 12 40.00% 15 50.00% 54 45.00% highly considered 4 13.30% 9 30.00% 7 23.30% 7 23.30% 27 22.50% utmost considered 1 3.30% 1 3.30% 3 10.00% 1 3.30% 6 5.00% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 46.70 % of the respondents with education level of SLC thought overall image of bank/brand name as considerable while 3.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 43.30% of the respondents under intermediate level thought this factor as considerable while 3.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 40% of the respondents thought this factor as considerable while 10% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 50% of the respondents thought this factor to be considerable while 3.30% of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

78

4.3.1.38 Cross tabulation between Education Level of investors and years of operation factor considered Table 50: Cross tabulation between Education Level of investors and Years of operation factor considered while making fundamental analysis of shares of commercial banks
Years of operation Education Level
SLC Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level Count % within Education Level least considered 5 16.70% 6 20.00% 2 6.70% 2 6.70% 15 12.50% moderately considered 16 53.30% 11 36.70% 12 40.00% 18 60.00% 57 47.50% considered 8 26.70% 10 33.30% 16 53.30% 8 26.70% 42 35.00% highly considered 1 3.30% 2 6.70% 0 0.00% 1 3.30% 4 3.30% utmost considered 0 0.00% 1 3.30% 0 0.00% 1 3.30% 2 1.70% Total 30 100.00% 30 100.00% 30 100.00% 30 100.00% 120 100.00%

Intermediate Education Level Bachelor

Master Level and above

Total

The above table shows that 53.30 % of the respondents with education level of SLC thought years of operation as moderately considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. 36.70% of the respondents under intermediate level thought this factor as moderately considerable while 3.30% of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. Also under bachelor level, 53.30% of the respondents thought this factor as considerable while none of them thought this factor to be utmost considerable for fundamental analysis of shares of commercial banks. And under the master and above level 60% of the respondents thought this factor to be moderately considerable while 3.30% of them thought this factor to be utmost considerable for the fundamental analysis of shares of commercial banks.

79

4.3.2 Intra-Industry/Company factor analysis 4.3.2.1 Intra-industry factor ranking by different age group of investors when market is bearish Table 51: Intra-industry factor ranking by different age group of investors when market is bearish Intra-Industry factor ranking based on mean
Age 20 to 30 years Industry Factors Impact of regulation & policies Liquidity position Ideology of political party in government Corporate governance Liquidity position Impact of regulation & policies Ideology of political party in government Corporate governance Liquidity position Impact of regulation & policies Ideology of political party in government Corporate governance N 12 12 12 12 67 67 67 67 41 41 41 41 Mean ranking 4 4 3.92 3.25 4.34 4.24 4.01 3.73 4.27 4.17 4.05 3.66

31 to 40 years

above 40 years

The above table shows that during bearish market trend industry factors are highly important for fundamental analysis of shares of commercial banks for to all age group of investors. Respondents with age group of 20 to 30 years thought impact of regulation and policies and liquidity position factor to be most important and corporate governance factor to be least important for fundamental analysis of shares of commercial banks. And, respondents with age group of 31 to 40 and above 40 years have given highest importance to liquidity position factor and least to corporate governance for fundamental analysis of shares of commercial banks. For all age group respondents corporate governance received lowest ranking for fundamental analysis of shares of commercial banks.

80

4.3.2.2Intra-company factor ranking by different age group of investors when market is bullish Table 52: Intra-company factor ranking by different age group of investors when market is bullish Intra-company factor ranking based on mean
Age
20 to 30 years Profitability Earning per share Management team Overall image of bank/brand name Loan loss size Dividend history Cost of fund Directors in Board Non-performing loan Interest spread Capital adequacy Loan portfolio size Size of deposit Number of branches Years of operation 31 to 40 years Earning per share Management team Profitability Cost of fund Non-performing loan Loan loss size Directors in Board Overall image of bank/brand name Dividend history Interest spread Loan portfolio size

Company Factors

N
12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 67 67 67 67 67 67 67 67 67 67 67

Mean ranking
4.33 4.17 4.08 3.83 3.75 3.67 3.67 3.67 3.58 3.33 2.92 2.83 2.5 2.5 2.5 4.36 4.36 4.1 3.97 3.81 3.72 3.67 3.63 3.49 3.45 3.39

81

Capital adequacy Size of deposit Years of operation Number of branches above 40 years Earning per share Management team Profitability Loan loss size Cost of fund Dividend history Non-performing loan Directors in Board Overall image of bank/brand name Capital adequacy Loan portfolio size Interest spread Years of operation Size of deposit Number of branches

67 67 67 67 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41

3.37 2.9 2.93 2.7 4.29 4.1 4 3.93 3.71 3.68 3.68 3.56 3.41 3.39 3.29 3.27 2.9 2.71 2.49

The above table shows that, respondents with age group of 20 to 30 give highest importance to profitability factor for fundamental analysis of shares of commercial banks with rating of 4.33. For the respondents with age group of 31 to 40 and above 40, they consider earning per share factor to be most important for fundamental analysis of shares of commercial banks. All age group respondents thought number of branches factor to be least important for fundamental analysis of shares of commercial banks.

82

4.3.2.3 Intra-company factor ranking by different income level investors when market is bearish Table 53: Intra-company factor ranking by different income level investors when market is bearish Intra-company factor ranking based on mean
Average monthly income
5,000 to 10,000

Company factors
Loan loss size Profitability Cost of fund Dividend history Non-performing loan Management team Overall image of bank/brand name Directors in Board Capital adequacy Loan portfolio size Number of branches Earning per share Interest spread Years of operation Size of deposit Profitability Non-performing loan Loan loss size Cost of fund Management team Dividend history Overall image of bank/brand name Directors in Board Capital adequacy Number of branches Loan portfolio size Earning per share Interest spread Years of operation Size of deposit Profitability Loan loss size Non-performing loan Cost of fund Number of branches Management team Dividend history Overall image of bank/brand name Directors in Board Capital adequacy Earning per share Loan portfolio size Years of operation Interest spread

N
16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 41 41 41 41 41 41 41 41 41 41 41 41 41 41

Mean
4.19 4.12 3.94 3.88 3.81 3.63 3.31 3.31 3.06 2.81 2.63 2.62 2.31 2.44 2.25 4.36 4.18 4.08 3.98 3.9 3.82 3.78 3.38 3.18 3.08 2.86 2.8 2.7 2.6 2.48 4.46 4.27 4.17 3.98 2.83 3.8 3.71 3.63 3.46 3.17 2.98 2.9 2.68 2.54

10,000 to 20,000

20,000 to 30,000

83

Above 30,000

Size of deposit Profitability Cost of fund Loan loss size Management team Non-performing loan Dividend history Overall image of bank/brand name Directors in Board Capital adequacy Years of operation Loan portfolio size Earning per share Number of branches Interest spread Size of deposit

41 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13

2.29 4.15 4 4 4 3.92 3.77 3.69 3.46 3.15 2.85 2.77 2.62 2.62 2.54 2.23

The above table shows except for respondents with income level of 5,000 to 10,000, all respondents regardless of their income level ranked profitability factor as most important for fundamental analysis of shared of commercial banks. Respondents with income level of 5,000 to 10,000 ranked loan loss size as most important for fundamental analysis of shares of commercial banks. Also all respondents regardless of their income level ranked size of deposit factor least important for fundamental analysis of shares of commercial banks.

4.3.3ANOVA test This analysis is done for the Anova testing analysis for total of 24 hypotheses to understand whether mean rating of industry and company factor varies for investors falling within different age, education and income level ANOVA test Analysis: H0: There is no statistically significant difference in the mean consideration given to industry factors between different age group of investors with long investment horizon

84

Table 54: Anova test for difference in the mean consideration given to industry factors between different age group of investors with long investment horizon
ANOVA Sum of Squares .260 25.777 26.037 df Mean Square F Sig. F

Between Groups Within Groups Total

2 117 119

.130 .220

.590

.556

Result: From the above ANOVA table, significance F=0.556 is found to be higher than significance level of 0.05 i.e. 0.556>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different age group of investors with long investment horizon, which means that the consideration given to industry factor by all age groups are not different in average. This infers that the age factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors with long investment horizon.
H0: There is no statistically significant difference in the mean consideration given to

industry factors between different age group of investors with short investment horizon Table 55: Anova test for difference in the mean consideration given to industry factors between different age group of investors with short investment horizon
ANOVA Sum of Squares .008 df Mean Square 2 .004 F Sig. F

Between Groups Within Groups Total

.017

.984

29.458 29.467

117 119

.252

Result: From the above ANOVA table, significance F=0.984 is found to be higher than significance level of 0.05 i.e. 0.984>0.05. This means that null hypotheses is accepted. This
85

implies that there is no statistically significant difference in the mean consideration given to industry factors between different age group of investors with short investment horizon, which means that the consideration given to industry factor by all age groups are not different in average. This infers that the age factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors with short investment horizon.

H0: There is no statistically significant difference in the mean consideration given to industry factors between different age group of investors when market is bullish Table 56: Anova test for difference in the mean consideration given to industry factors between different age group of investors when market is bullish
ANOVA Sum of Squares .385 df Mean Square 2 .192 F Sig. F

Between Groups Within Groups Total

1.298

.277

17.340

117

.148

17.724

119

Result: From the above ANOVA table, significance F=0.277 is found to be higher than significance level of 0.05 i.e. 0.277>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different age group of investors when market is bullish, which means that the consideration given to industry factor by all age groups are not different in average. This infers that the age factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors, in bullish market.

86

 H0: There is no statistically significant difference in the mean consideration given to industry factors between different age group of investors when market is bearish Table 57: Anova test for difference in the mean consideration given to industry factors between different age group of investors when market is bearish
ANOVA Sum of Squares .858 df Mean Square 2 .429 F Sig. F

Between Groups Within Groups Total

3.693

.028

13.598 14.456

117 119

.116

Result: From the above ANOVA table, significance F=0.028 is found to be lower than significance level of 0.05 i.e. 0.028<0.05. This means that null hypotheses is rejected. This implies that there is statistically significant difference in the mean consideration given to industry factors between different age group of investors when market is bearish, which means that the consideration given to industry factor by all age groups are different in average. This infers that the age factor does influence the consideration of industry factors in the fundamental analysis when it comes to investors, in bearish market.

H0: There is no statistically significant difference in the mean consideration given to company factors between different age group of investors with long investment horizon Table 58: Anova test for difference in the mean consideration given to company factors between different age group of investors with long investment horizon
ANOVA Sum of Squares .009 df Mean Square 2 .004 F Sig. F

Between Groups Within Groups Total

.062

.940

8.014 8.022

117 119

.068

87

Result: From the above ANOVA table, significance F=0.940 is found to be higher than significance level of 0.05 i.e. 0.940>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different age group of investors with long investment horizon, which means that the consideration given to company factors by all age groups are not different in average. This infers that the age factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors with long investment horizon

H0: There is no statistically significant difference in the mean consideration given to company factors between different age group of investors with short investment horizon Table 59: Anova test for difference in the mean consideration given to company factors between different age group of investors with short investment horizon
ANOVA Sum of Squares .095 df Mean Square 2 .048 F Sig. F

Between Groups Within Groups Total

.878

.418

6.363 6.459

117 119

.054

Result: From the above ANOVA table, significance F=0.418 is found to be higher than significance level of 0.05 i.e. 0.418>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different age group of investors with short investment horizon, which means that the consideration given to company factors by all age groups are not different in average. This infers that the age factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors with short investment horizon

88

 H0: There is no statistically significant difference in the mean consideration given to company factors between different age group of investors when market is bullish Table 60: Anova test for difference in the mean consideration given to company factors between different age group of investors when market is bullish
ANOVA Sum of Squares .413 df Mean Square 2 .207 F Sig. F

Between Groups Within Groups Total

4.438

.014

5.448 5.861

117 119

.047

Result: From the above ANOVA table, significance F=0.014 is found to be lower than significance level of 0.05 i.e. 0.014<0.05. This means that null hypotheses is rejected. This implies that there is statistically significant difference in the mean consideration given to company factors between different age group of investors when market is bullish, which means that the consideration given to company factors by all age groups are different in average. This infers that the age factor does influence the consideration of company factor in the fundamental analysis when it comes to investors, in bullish market

H0: There is no statistically significant difference in the mean consideration given to company factors between different age group of investors when market is bearish Table 61: Anova test for difference in the mean consideration given to company factors between different age group of investors when market is bearish
ANOVA Sum of Squares .035 6.622 6.657 df Mean Square F Sig. F

Between Groups Within Groups Total

2 117 119

.018 .057

.310

.734

89

Result: From the above ANOVA table, significance F=0.734 is found to be higher than significance level of 0.05 i.e. 0.734> 0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different age group of investors when market is bearish, which means that the consideration given to company factors by all age groups are not different in average. This infers that the age factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors, in bearish market

H0: There is no statistically significant difference in the mean consideration given to industry factors between different education level investors with long investment horizon

Table 62: Anova test for difference in the mean consideration given to industry factors between different education level investors with long investment horizon
ANOVA Sum of Squares .131 25.906 26.037 df Mean Square 3 116 119 .044 .223 F Sig. F

Between Groups Within Groups Total

.195

.900

Result: From the above ANOVA table, significance F=0.90 is found to be higher than significance level of 0.05 i.e. 0.90>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different education level investors with long investment horizon, which means that the consideration given to industry factors by all education level investors are not different in average. This infers that the education level factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors with long investment horizon.

90

 H0: There is no statistically significant difference in the mean consideration given to industry factors between different education level investors with short investment horizon Table 63: Anova test for difference in the mean consideration given to industry factors between different education level investors with short investment horizon
ANOVA Sum of Squares .804 df Mean Square 3 .268 F Sig. F

Between Groups Within Groups Total

1.085

.358

28.663 29.467

116 119

.247

Result: From the above ANOVA table, significance F=0.358 is found to be higher than significance level of 0.05 i.e. 0.358>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different education level investors with short investment horizon, which means that the consideration given to industry factors by all education level investors are not different in average. This infers that the education level factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors with short investment horizon. H0: There is no statistically significant difference in the mean consideration given to industry factors between different education level investors when market is bullish Table 64: Anova test for difference in the mean consideration given to industry factors between different education level investors when market is bullish
ANOVA Sum of Squares .156 df Mean Square 3 .052 F Sig. F

Between Groups Within Groups Total

.343

.794

17.569 17.724

116 119

.151

91

Result: From the above ANOVA table, significance F=0.794 is found to be higher than significance level of 0.05 i.e. 0.794>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different education level investors when market is bullish, which means that the consideration given to industry factors by all education level investors are not different in average. This infers that the education level factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors, in bullish market.

H0: There is no statistically significant difference in the mean consideration given to industry factors between different education level investors when market is bearish Table 65: Anova test for difference in the mean consideration given to industry factors between different education level investors when market is bearish
ANOVA Sum of Squares df Mean Square 3 116 119 .051 .123 F Sig. F .745

Between Groups Within Groups Total

.152 14.304 14.456

.411

Result: From the above ANOVA table, significance F=0.745 is found to be higher than significance level of 0.05 i.e. 0.745>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different education level investors when market is bearish, which means that the consideration given to industry factors by all education level investors are not different in average. This infers that the education level factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors, in bearish market

92

 H0: There is no statistically significant difference in the mean consideration given to company factors between different education level investors with long investment horizon Table 66: Anova test for difference in the mean consideration given to company factors between different education level investors with long investment horizon
ANOVA Sum of Squares .081 df Mean Square 3 .027 F Sig. F

Between Groups Within Groups Total

.396

.756

7.941 8.022

116 119

.068

Result: From the above ANOVA table, significance F=0.756 is found to be higher than significance level of 0.05 i.e. 0.756>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different education level investors with long investment horizon, which means that the consideration given to company factors by all education level investors are not different in average. This infers that the education level factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors with long investment horizon.

93

 H0: There is no statistically significant difference in the mean consideration given to company factors between different education level investors with short investment horizon Table 67: Anova test for difference in the mean consideration given to company factors between different education level investors with short investment horizon
ANOVA Sum of Squares .038 df Mean Square 3 .013 F Sig. F

Between Groups Within Groups Total

.227

.878

6.421 6.459

116 119

.055

Result: From the above ANOVA table, significance F=0.878 is found to be higher than significance level of 0.05 i.e. 0.878>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different education level investors with short investment horizon, which means that the consideration given to company factors by all education level investors are not different in average. This infers that the education level factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors with short investment horizon. H0: There is no statistically significant difference in the mean consideration given to company factors between different education level investors when market is bullish Table 68: Anova test for difference in the mean consideration given to company factors between different education level investors when market is bullish
ANOVA Sum of Squares .035 5.826 5.861 df Mean Square 3 116 119 .012 .050 F Sig. F

Between Groups Within Groups Total

.234

.873

94

Result: From the above ANOVA table, significance F=0.873 is found to be higher than significance level of 0.05 i.e. 0.873>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different education level investors when market is bullish, which means that the consideration given to company factors by all education level investors are not different in average. This infers that the education level factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors, in bullish market

H0: There is no statistically significant difference in the mean consideration given to company factors between different education level investors when market is bearish Table 69: Anova test for difference in the mean consideration given to company factors between different education level investors when market is bearish
ANOVA Sum of Squares .168 df Mean Square 3 .056 F Sig. F

Between Groups Within Groups Total

.998

.396

6.489 6.657

116 119

.056

Result: From the above ANOVA table, significance F=0.396 is found to be higher than significance level of 0.05 i.e. 0.396>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different education level investors when market is bearish, which means that the consideration given to company factors by all education level investors are not different in average. This infers that the education level factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors, in bearish market

95

 H0: There is no statistically significant difference in the mean consideration given to industry factors between different income level investors with long investment horizon Table 70: Anova test for difference in the mean consideration given to industry factors between different income level investors with long investment horizon
ANOVA Sum of Squares .092 df Mean Square 3 .031 F Sig. F

Between Groups Within Groups Total

.138

.937

25.945 26.037

116 119

.224

Result: From the above ANOVA table, significance F=0.937 is found to be higher than significance level of 0.05 i.e. 0.937>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different income level investors with long investment horizon, which means that the consideration given to industry factors by all income level investors are not different in average. This infers that the income level factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors with long investment horizon.

96

 H0: There is no statistically significant difference in the mean consideration given to industry factors between different income level investors with short investment horizon Table 71: Anova test for difference in the mean consideration given to industry factors between different income level investors with short investment horizon
ANOVA Sum of Squares .534 df Mean Square 3 .178 F Sig. F

Between Groups Within Groups Total

.713

.546

28.933 29.467

116 119

.249

Result: From the above ANOVA table, significance F=0.546 is found to be higher than significance level of 0.05 i.e. 0.546>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different income level investors with short investment horizon, which means that the consideration given to industry factors by all income level investors are not different in average. This infers that the income level factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors with short investment horizon.

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 H0: There is no statistically significant difference in the mean consideration given to industry factors between different income level investors when market is bullish Table 72: Anova test for difference in the mean consideration given to industry factors between different income level investors when market is bullish
ANOVA Sum of Squares .641 df Mean Square 3 .214 F Sig. F

Between Groups Within Groups Total

1.450

.232

17.084 17.724

116 119

.147

Result: From the above ANOVA table, significance F=0.232 is found to be higher than significance level of 0.05 i.e. 0.232>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different income level investors when market is bullish, which means that the consideration given to industry factors by all income level investors are not different in average. This infers that the income level factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors, in bullish market H0: There is no statistically significant difference in the mean consideration given to industry factors between different income level investors when market is bearish Table 73: Anova test for difference in the mean consideration given to industry factors between different income level investors when market is bearish
ANOVA Sum of Squares .578 df Mean Square 3 .193 F Sig. F

Between Groups Within Groups Total

1.611

.191

13.878 14.456

116 119

.120

98

Result: From the above ANOVA table, significance F=0.191 is found to be higher than significance level of 0.05 i.e. 0.191>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to industry factors between different income level investors when market is bearish, which means that the consideration given to industry factors by all income level investors are not different in average. This infers that the income level factor doesnt influence the consideration of industry factor in the fundamental analysis when it comes to investors, in bearish market H0: There is no statistically significant difference in the mean consideration given to company factors between different income level investors with long investment horizon Table 74: Anova test for difference in the mean consideration given to company factors between different income level investors with long investment horizon
ANOVA Sum of Squares .157 df Mean Square 3 .052 F Sig. F

Between Groups Within Groups Total

.773

.511

7.865 8.022

116 119

.068

Result: From the above ANOVA table, significance F=0.511 is found to be higher than significance level of 0.05 i.e. 0.511>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different income level investors with long investment horizon, which means that the consideration given to company factors by all income level investors are not different in average. This infers that the income level factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors with long investment horizon

99

 H0: There is no statistically significant difference in the mean consideration given to company factors between different income level investors with short investment horizon Table 75: Anova test for difference in the mean consideration given to company factors between different income level investors with short investment horizon
ANOVA Sum of Squares .052 df Mean Square 3 .017 F Sig. F

Between Groups Within Groups Total

.313

.816

6.407 6.459

116 119

.055

Result: From the above ANOVA table, significance F=0.816 is found to be higher than significance level of 0.05 i.e. 0.816>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different income level investors with short investment horizon, which means that the consideration given to company factors by all income level investors are not different in average. This infers that the income level factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors with short investment horizon

H0: There is no statistically significant difference in the mean consideration given to company factors between different income level investors when market is bullish Table 76: Anova test for difference in the mean consideration given to company factors between different income level investors when market is bullish ANOVA Sum of Squares .187 df Mean Square 3 .062 F Sig. F

Between Groups Within Groups Total

1.277

.286

5.674

116

.049

5.861

119
100

Result: From the above ANOVA table, significance F=0.286 is found to be higher than significance level of 0.05 i.e. 0.286>0.05. This means that null hypotheses is accepted. This implies that there is no statistically significant difference in the mean consideration given to company factors between different income level investors when market is bullish, which means that the consideration given to company factors by all income level investors are not different in average. This infers that the income level factor doesnt influence the consideration of company factor in the fundamental analysis when it comes to investors, in bullish market

H0: There is no statistically significant difference in the mean consideration given to company factors between different income level investors when market is bearish Table 77: Anova test for difference in the mean consideration given to company factors between different income level investors when market is bearish
ANOVA Sum of Squares .499 df Mean Square 3 .166 F Sig. F

Between Groups Within Groups Total

3.133

.028

6.158 6.657

116 119

.053

Result: From the above ANOVA table, significance F=0.028 is found to be lower than significance level of 0.05 i.e. 0.028<0.05. This means that null hypotheses is rejected. This implies that there is statistically significant difference in the mean consideration given to company factors between different income level investors when market is bearish, which means that the consideration given to company factors by all income level investors are different in average. This infers that the income level factor does influence the consideration of company factor in the fundamental analysis when it comes to investors, in bearish market

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4.3.4 Chi-square test 4.3.4.1 Test of significant association between age group of investors and their consideration of ideology of political party in government as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between age group of investors and their consideration of ideology of political party in government as a factor for fundamental analysis Table 78: Chi-square test between age group of investors and their consideration of ideology of political party in government factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value 4.551 8 0.804

Pearson Chi-Square

Result: From the above table, it has been observed that the P value is 0.804 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between age of investors and their consideration of ideology of political party in government factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the age factor does not influence the consideration of ideology of political party in government factor in the fundamental analysis.

4.3.4.2 Test of significance association between age group of investors and their consideration of liquidity position as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between age group of investors and their consideration of liquidity position as a factor for fundamental analysis

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Table 79: Chi-square test between age group of investors and their consideration of liquidity position factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value Pearson Chi-Square 3.229 df P value 6 0.78

Result: From the above table, it has been observed that the P value is 0.78 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between age of investors and their consideration of liquidity position factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the age factor does not influence the consideration of liquidity position factor in the fundamental analysis.

4.3.4.3 Test of significant association between age group of investors and their consideration of profitability as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between age group of investors and their consideration of profitability as a factor for fundamental analysis Table 80: Chi-square test between age group of investors and their consideration of profitability factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value Pearson Chi-Square 5.312a

df P value 6 0.504

Result: From the above table, it has been observed that the P value is 0.504 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between age of investors and their consideration of profitability factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the age factor does not influence the consideration of profitability factor in the fundamental analysis.
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4.3.4.4 Test of significant association between age group of investors and their consideration of management team as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between age group of investors and their consideration of management team as a factor for fundamental analysis Table 81: Chi-square test between age group of investors and their consideration of management team factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 9.781 8 0.281

Result: From the above table, it has been observed that the P value is 0.281 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between age of investors and their consideration of management team factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the age factor does not influence the consideration of management team factor in the fundamental analysis.

4.3.4.5 Test of significant association between education level of investors and their consideration of ideology of political party in government as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between education level of investors and their consideration of ideology of political party in government as a factor for fundamental analysis

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Table 82: Chi-square test between education level of investors and their consideration of ideology of political party in government factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 8.99 12 0.704

Result: From the above table, it has been observed that the P value is 0.704 which is higher than our significance level i.e. 0.05. Thus, null hypotheses is accepted. This implies that there is no significant relationship between education level of investors and their consideration of ideology of political party in government factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the education factor does not influence the consideration of ideology of political party in government factor in the fundamental analysis. 4.3.4.6 Test of significant association between education level of investors and their consideration given to liquidity position as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between education level of investors and their consideration of liquidity position as a factor for fundamental analysis Table 83: Chi-square test between education level of investors and liquidity position factor considered while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 7.365 9 0.599

Result: From the above table, it has been observed that the P value is 0.599 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between education level of investors and their consideration of liquidity position factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial
105

banks. This also infers that the education factor does not influence the consideration of liquidity position factor in the fundamental analysis.

4.3.4.7 Test of significant association between education level of investors and their consideration given to profitability as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between education level of investors and their consideration of profitability as a factor for fundamental analysis Table 84: Chi-square test between education level of investors and their consideration of profitability factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 10.333 9 0.324

Result: From the above table, it has been observed that the P value is 0.324 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between education level of investors and their consideration of profitability factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the education factor does not influence the consideration of profitability factor in the fundamental analysis.

4.3.4.8 Test of significant association between education level of investors and their consideration given to management team as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between education level of investors and their consideration of management team as a factor for fundamental analysis

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Table 85: Chi-square test between education level of investors and management team factor considered while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 9.801 12 0.633

Result: From the above table, it has been observed that the P value is 0.633 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between education level of investors and their consideration of management team factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the education factor does not influence the consideration of profitability factor in the fundamental analysis.

4.3.4.9 Test of significant association between income level of investors and their consideration given to ideology of political party in government as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between income level of investors and their consideration of ideology of political party in government as a factor for fundamental analysis Table 86: Chi-square test between income level of investors and their consideration of ideology of political party in government factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 11.046 12 0.525

Result: From the above table, it has been observed that the P value is 0.525 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between income level of investors and their consideration of ideology of political party in government factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial
107

banks. This also infers that the income factor does not influence the consideration of ideology of political party in government factor in the fundamental analysis. 4.3.4.10 Test of significant association between income level of investors and their consideration given to liquidity position as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between income level of investors and their consideration of liquidity position as a factor for fundamental analysis Table 87: Chi-square test between income level of investors and their consideration of liquidity position factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 6.696 9 0.669

Result: From the above table, it has been observed that the P value is 0.669 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between income level of investors and their consideration of liquidity position factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the income factor does not influence the consideration of liquidity position factor in the fundamental analysis.

4.3.4.11 Test of significant association between income level of investors and their consideration given to profitability as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between income level of investors and their consideration of profitability as a factor for fundamental analysis

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Table 88: Chi-square test between income level of investors and their consideration of profitability factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 14.782 9 0.097

Result: From the above table, it has been observed that the P value is 0.097 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between income level of investors and their consideration of profitability factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the income factor does not influence the consideration of profitability factor in the fundamental analysis. 4.3.4.12 Test of significant association between income level of investors and their consideration given to management team as a factor for fundamental analysis of shares of commercial banks Null hypotheses (H0): There exists no significant association between income level of investors and their consideration of management team as a factor for fundamental analysis Table 89: Chi-square test between income level of investors and their consideration of management team factor while making fundamental analysis of shares of commercial banks
Chi-Square Tests Value df P value Pearson Chi-Square 10.127 12 0.605

Result: From the above table, it has been observed that the P value is 0.605 which is higher than our significance level i.e. 0.05. Thus, a null hypothesis is accepted. This implies that there is no significant relationship between income level of investors and their consideration of management team factor, which means that these two factors are independent of each other while making fundamental analysis of shares of commercial banks. This also infers that the income factor does not influence the consideration of management team factor in the fundamental analysis.
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Chapter 5 Summary and Conclusions

This chapter presents the overall summary of the study and conclusions drawn from the analysis of the study. This also includes recommendations to various related authorities. 5.1 Summary of findings This study was conducted to analyze what fundamental (industry and company) factors investors consider when making fundamental analysis of shares of commercial banks. Through pilot study key industry and company factors were identified which are listed in the questionnaire. Full scale survey was conducted among 120 respondents and this study used only primary data. The study used the descriptive approach also based on both technical and logical aspects The collected responses to the questions were then analyzed using SPSS software. Under SPSS software various statistical tools were used like percentage analysis, cross tabulation analysis and ANOVA test analysis. Knowledge of fundamental analysis The research was targeted at share investors who are registered with brokerage firm and actively traded shares. This helped to approach only those investors who understood fundamentals related to banks. It was found that 100% of the respondents who have filled the questionnaire had invested in shares of commercial banks. Other findings were All 100% of the respondents do fundamental analysis. All the respondents were male. Few female had registered with brokers but not actively involved in share trading Few had difficulties understanding meaning of factors listed in questionnaire. However, most difficult factor for investors to understand was corporate governance
110

Most investors understood the difference between industry and company factor. All of the respondents had invested during bullish and bearish market. All the respondents i.e. 100% of them did some kind of self-research while investing in shares of commercial banks

Consideration of factors by investors with long investment horizon During the research it was found that 68.3% of the investors had long investment horizon. It was found from the research that investors with long investment horizon had given more importance to industry factors than company factors regardless of age group and educational level they fall in. This is shown by mean rating of industry and company factors by different age group and educational level investors as follows: Age group Mean rating

20 to 30 years industry factor (3.6042), company factor (2.7222) 31 to 40 years industry factor (3.4478), company factor (2.7154) above 40 years industry factor (3.4512), company factor (2.6992) Educational Level SLC Intermediate Bachelor Master Level and above Mean rating industry factor (3.5167), company factor (2.7289) industry factor (3.4583), company factor (2.7311) industry factor (3.4583), company factor (2.6667) industry factor (3.4250), company factor (2.7156)

Consideration of factors by investors with short investment horizon During the research it was found that 28.30% of the investors had short investment horizon. It was found from the research that investors with short investment horizon had given more importance to company factors than industry factors regardless of age group and educational level they fall in. This is shown by mean rating of industry and company factors by different age group and educational level investors as follows: Age group Mean rating

20 to 30 years industry factor (2.5833), company factor (3.2389) 31 to 40 years industry factor (2.5560), company factor (3.3224) above 40 years industry factor (2.5549), company factor (3.3398)
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Educational Level SLC Intermediate Bachelor Masters Level and above

Mean rating industry factor (2.6833), company factor (3.3267) industry factor (2.4583), company factor (3.2933) industry factor (2.5250), company factor (3.3422) industry factor (2.5667), company factor (3.3178)

Importance given to industry/company factors by investors when market is bullish It was found from the research that investors gave more importance to company factors than industry factors regardless of age group and educational level they fall in when market is bullish. This is shown by mean rating of industry and company factors by different age group and educational level investors Age group 20 to 30 years 31 to 40 years above 40 years Mean rating industry factor (2.7708), company factor (3.4222) industry factor (2.8694), company factor (3.5891) industry factor (2.9573), company factor (3.4943)

Educational Level SLC Intermediate Bachelor Masters Level and above

Mean rating industry factor (2.9500), company factor (3.5289) industry factor (2.8583), company factor (3.5178) industry factor (2.8667), company factor (3.5556) industry factor (2.8833), company factor (3.5578)

Importance given to industry/company factors by investors when market is bearish It was found from the research that investors gave more importance to industry factors than company factors regardless of age group and educational level they fall in when market is bearish. This is shown by mean rating of industry and company factors by different age group and educational level investors

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Age group 20 to 30 years 31 to 40 years above 40 years

Mean rating industry factor (3.7917), company factor (3.3222) industry factor (4.0821), company factor (3.3692) industry factor (4.0366), company factor (3.3837)

Educational Level SLC Intermediate Bachelor Masters Level and above

Mean rating industry factor (4.0833), company factor (3.3222) industry factor (3.9917), company factor (3.3444) industry factor (4.0167), company factor (3.4133) industry factor (4.0583), company factor (3.3978)

Source of information considered as worthy for share analysis This was intended to identify which source investors relied most for making fundamental analysis of shares of commercial banks. Majority of the investors considered more than one source as worthy. Moreover all the 120 respondents considered self-research as most worthy source of information for share analysis. The percentage in brackets indicates respondents who said they considered that particular source as worthy. (Percentage is calculated out of 120 for each source option) Research report published by individuals and institutions (26.7%),Recommendations/suggestions from brokers (31.7%), Investment management service providers (8.3%), Self- research (100%), Research web sites (21.66667%), Tips from relatives/friends (36.66667)

Findings from Intra-industry/company analysis It was found that for industry factors when market is bearish, investors with age group of 20 to 30 years give highest importance to impact of regulation and policies and liquidity position factor while for age group of 31 to 40 and above 40 years give highest importance to liquidity position. All age group respondents gave corporate governance lowest ranking. It was found that for company factors when market is bullish, investors with age group of 20 to 30 years give highest importance to profitability factor with rating 4 i.e. 4.33 while for the
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age group of 31 to 40 and above 40 years, it is the earning per share that is the most important. All age group respondents gave number of branches factor lowest ranking. For company factor when market is bearish, it was found that all income level respondents give highest ranking to profitability factor except for respondents with income level of 5,000 to 10,000 which ranks loan loss size as most important. Also all income level respondents rank size of deposit factor as lowest with an average of 2.33

Findings from ANOVA test analysis It was found that in all the hypotheses testing, there was no significant difference inthe mean consideration given to industry/company factor between different age, education and income level investors. Only three null hypotheses were rejected i.e. there is no statistically significant difference in the mean consideration given to industry factor between different age group of investors when market is bearish, there is no statistically significant difference in the mean consideration given to company factor between different age group of investors when market is bullish and there is no statistically significant difference in the mean consideration given to company factor mean between different income level investors when market is bearish. All other hypotheses were accepted. It shows that most of the investors give similar importance to industry and company factors regardless of their investment horizon and the trend of the market i.e. bullish or bearish. One of the puzzling findings from this research is that in Nepalese investors gave somewhat equal importance to all the intra-industry factors and intra-company factors regardless of in which age group, education level or income level they belonged to. This arise an important question that is why Nepalese investors showed such unique characteristics where even the education level and age factor had no influence on their consideration of factors as shown by similar mean ranking of factors. This can be a starting point for researchers to do further study in the days to come. So i think this analysis and findings can be further studied by other researchers to test why Nepalese investors rated factors in similar fashion in spite of including such a huge sample

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size and investors of all demographic profile with ease of accessibility and availability of information on industry and company factors.

Findings from Chi-square test analysis Findings from chi-square test: association of age, education and income level with four major factors considered by investors while making fundamental analysis of shares of commercial banks
Age P value Education Level P value P value Income Level

Factors Ideology of political party in government Liquidity position

Decision P Value>0.05;Accept Ho P Value>0.05;Accept Ho P Value>0.05;Accept Ho P Value>0.05;Accept Ho

Decision P Value>0.05;Accept Ho P Value>0.05;Accept Ho P Value>0.05;Accept Ho P Value>0.05;Accept Ho

Decision P Value>0.05;Accept Ho P Value>0.05;Accept Ho P Value>0.05;Accept Ho P Value>0.05;Accept Ho

0.804

0.704

0.525

0.78

0.599

0.699

Profitability Management team

0.504

0.324

0.097

0.281

0.633

0.605

Here, Criteria for testing relationship: P value< Sig. level of 0.05; Reject H0 From the above table it can be seen that there exists no significant association of age, education and income level with ideology of political party in government, liquidity position, profitability and management team as factors considered for fundamental analysis of shares of commercial banks. This makes researcher to make inference that in Nepalese context, investors consideration of above four fundamental factors are not influenced by their age, education level and income level. In other words, Nepalese investors show no clear distinction on their consideration of these factors regardless of their age, education or income

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5.2 Conclusions This study identified various aspects of investors trading in commercial banks of Nepal. This study sought to identify only those fundamental factors which Nepalese investors consider important with context to Nepalese banking environment and how it affected the return in shares. This research proved to be useful in getting first hand data from professional investors on how choice of factors and its importance changes with change in their own situation and market conditions. It shows that more than 50% of the professional individual investors are mid-aged (31 to 40 years) and almost 100% of the investors are male. Most of the respondents i.e. 40.8% of them had private service or were self-employed, students comprised of 15% and only small fractions i.e. 2.5% were government service holder. It also showed that majority of them have monthly income between Rs.10, 000 to 20,000 followed by income between Rs.20, 000 to 30,000. It shows that the professional investors in Nepal have usually long investment horizon. They understand the difference in fundamental analysis needed for bullish and bearish market trend. It was found that investors understand the importance of industry and company factor according to time and situation of market and banking sector conditions. Moreover, it was found that investors rely on their own self-research more than on any other source of information. From the Anova testing it was found that factor rating is not quite different among investors of different age group, education level or income level investors. Only for industry factor ranking by different age group of investors when market is bearish, company factor ranking by different age group of investors when market is bullish and company factor ranking by different income level investors when market is bearish showed that there was difference in factor rating by investors. In my view, the reason behind such similarity in mean rating given to factors is due to lack of proper knowledge of factors they are considering for fundamental analysis. This gives support to the popular belief that Nepalese investors show herd behavior and are influenced by whim. Otherwise, at least varying education level of investors should have made difference in the way they rated factors.
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The findings from the chi-square analysis are too quite peculiar. All the null hypotheses were accepted. Here, again this finding should be scrutinize because fundamental factors like ideology of political party in government, liquidity position, profitability and management team are such factors whose importance to investors varies with age and education level if not that with income level. This is because to understand these factors investors need different level of experience and knowledge. So, this study has outlined that there is no significant association of age, education and income level factor and above four important fundamental factors. The reason behind this finding can be a topic of further study. However, another findings of this study is that Nepalese professional share traders have increasingly becoming aware of importance of fundamental analysis and role of fundamental factors in determining price and return of shares of commercial banks. In overall, for industry factor investors considered ideology of political party in government and liquidity position most and for company factor investors considered profitability, management team, directors in board, loan loss provision, capital adequacy and overall image of bank/brand name most for fundamental analysis of shares of commercial banks. Here, I would like to

5.3 Recommendations On the basis of findings and conclusions as well as brief discussion with investors, following recommendations are made: There must be supportive government rules and regulations to encourage the investors. During the survey it was found that investors were very much demotivated by unsupportive government regulations. Commercial banks must work more transparently, meaning they should make available of both qualitative and quantitative data to share traders. This will ensure availability of right information at the right time to investors which will prove to be valuable for share analysis.

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Investors should broaden their source of information while making fundamental analysis of shares of commercial banks. It was found that they mostly rely on selfresearch this is not enough especially when there is so much uncertainty associated with commercial banks fundamentals. Getting suggestions from investment management service providers and brokers could be useful especially to new investors.

There needs to be more involvement of female share traders so that share market can become more inclusive both gender wise and also welcoming of new ideas. Brokers should act as an important and responsible party for guiding share traders. They should not limit themselves to increasing number of members but also focus on disseminating information and providing training to investors on timely basis.

Investors should spend more time studying fundamental factors related to commercial banks. This is important because banks are easily affected by both its industry and company factors.

Investors should also keep an eye on how banks have been working on its qualitative factors like corporate governance, corporate social responsibility and obeying rules and regulation of NRB. This is important because banks giving priority to above mentioned factors are more stable and less shaken (affected) by changes in industry and company factors and investors can earn stable earning from shares of such banks

The price fluctuating trend is not predictable by general investors.So, investors are recommended to get the consultancy servicefr om the investment experts while making the investment

The findings of this research can be a starting point for other enthusiastic researchers to study on findings of both ANOVA and Chi-square statistic test. Researchers can study further on why age group, education and income factors had no influence on their consideration of fundamental factors as shown by chi-square test and why all investors regardless of their age, education and income showed no difference in rating given to given industry and company factors.

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Bibliography
Allahawiah, S., & Amro, S. A. (2012). Factors affecting Stock Market Prices in Amman Stock Exchange:A Survey Study. European Journal of Business and Management, No. 8. Ariff, M., & Khan , W. (2000). Key Fundamental Factors and Long Run Price Stock Price Changes. 1422. Davari, M. (2011). Survey of effective factors on stock's Fundamental analysis Isfahan Stock Exchange. . Journal of Economic Studies, 7-30. Kadariya, S. (2012). Factors affecting investor decision making: A case of Nepalese capital market. Journal of Research in Economics and Internationla Studies, 21-22,29. Kevin, S. (2001). Portfolio Management. New Delhi: Prentice-Hall of India. Khanifar, H., Jamshidi, N., & Mohammadinejad, M. (2012). Studying Affecting Factors on Analysts Decisions Regarding Share Analysis in Tehran Stock Exchange:A Fundamental Analysis Approach. European Journal of Economics, Finance and Administrative Sciences, 78-81. Negy, R. O. (1994). Factors influencing individual investors behavior. Financial Analysts Journal, 6368. Osaze , B. E. (1985). The Effect of Corporate earnings, Dividends and Volume on Stock Price Movements in Nigeria. Benin Journal of Social Science. Pradhan, S. (2011). Fundamental variables and stock return. Unpublished MBA Thesis, Ace Institute of Management, Kathmandu. Shrestha, S. (2010). Investors Awareness in Nepalese Capital Market. Unpublished MBA Thesis, Ace Institute of Management, Kathmandu. Venkatesh, C., & Tyagi, M. (2011). The use of Fundamental and Technical Analysis by Stock Exchange Dealers: Indian Evidence. Middle Eastern Finance and Economics.

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APPENDIX

Appendix A Research Questionnaire

Question No.. Dear respondent: I am Sandarva Pal, a MBA student at Ace Institute of Management. I am involved in a research work towards completion of my graduate thesis. This questionnaire has been prepared for conducting research on Factors investors consider while making fundamental analysis of stocks of commercial banks in Nepal Please feel free to express your response regarding these queries. The information you provide will be kept confidential and will be used only for academic purpose

Profile of the Respondent

A. Name (optional).. B. E-mail (optional). C. Gender D. Age E. Education Level F. Profession 1. Male 1. 20 to 30 yrs. 1. SLC 2. Female 2. 31 to 40yrs. 3.Bachelor 3. above 40 yrs. 4. Masters Level and above 3. Business/ Self-employed

2.Intermediate

1. Government Service 4. Student

2.Private Service

5. Other (Please Specify).. 3. 10,000 to 20,000

G. Average monthly income (in Rs.): 1. 0 to 5,000 2. 5000 to 10,000 4. 20,000 to 30,000 5. Above 30,000
Definition of key terms:

Fundamental analysis: fundamental analysis involves analyzing the economy, strategy, management, product, financial status and other related information to choose shares that will outperform the market and provide consistent gains to the investor. Fundamental factors: factors relating to the company, industry, and economy e.g. management team, industry growth and economic conditions that affect performance of bank and hence stock price Investment horizon: Duration of holding the security (stock).

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Bullish market: stock price in increasing trend Bearish market: stock price in declining trend Industry factors: factors which immediately affect the bank, such as industry growth and competition, as a result of being part of that industry which are to some extent in control of managers Company factors: factors that are related to specific bank such as liquidity and loan Earnings Per share: Rupee earning by bank for each share outstanding Policy: policy regarding money supply, interest rate etc. Interest spread: The percentage difference between the interest rate charged on a bank loan and the lender's cost of funds Board of directors (BOD):Governing body of a bank, elected by shareholders to represent their interests in managing the bank Liquidity Position: amount of asset that can be easily converted to cash Loan portfolio: composition of types of loan Non-performing loan: an advance where payment of interest or repayment of installment of principal or both remains unpaid for a period of two quarters or more. Capital adequacy: level of capital which is adequate with the level of risk undertaken.

1. While Investing for long term, how do you rate the factors you consider most which includes Industry and Company aspects: Rating Scale 1 to 5, 1 = least considered, 2=moderately considered, 3=considered, 4=highly considered, 5=utmost considered. (Tick only one option for each factor)
S.N. STATEMENTS 1 2 3 4 5

Industry Factors Company Factors

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Ideology of political party in government Impact of regulation & policies Corporate governance Liquidity Position Capital adequacy Earning per share Interest spread Cost of fund Profitability Loan portfolio size Loan loss provision Dividend history size of deposit Non-performing loan Number of branches Management Team Directors in Board Overall image of bank/brand name years of operation

2. What is your typical investment horizon? 1. Short term (less than 1year) 2. Mid-term (1-2 years)

3. Long term (more than 2 years) 121

3. If your investment horizon is short, how do you rate the following factors which include Industry and Company aspects: Rating Scale 1 to 5, 1 = least considered, 2=moderately considered, 3=considered, 4=highly considered, 5=utmost considered. (Tick only one option for each factor)
S.N. STATEMENTS 1 2 3 4 5

Industry Factors Company Factors

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Ideology of political party in government Impact of regulation & policies Corporate governance Liquidity Position Capital adequacy Earning per share Interest spread Cost of fund Profitability Loan portfolio size Loan loss provision Dividend history size of deposit Non-performing loan Number of branches Management Team Directors in Board Overall image of bank/brand name years of operation

4. Rank fundamental factors based on importance you give them when market is bullish. Rating Scale 1 to 5, 1= Least important, 2= moderately important, 3= important, 4= highly important, 5= utmost important
S.N. STATEMENTS 1 2 3 4 5

Industry Factors Company Factors

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Ideology of political party in government Impact of regulation & policies Corporate governance Liquidity Position Capital adequacy Earning per share Interest spread Cost of fund Profitability Loan portfolio size Loan loss provision Dividend history size of deposit Non-performing loan Number of branches Management Team Directors in Board Overall image of bank/brand name years of operation

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5. Rank fundamental factors based on importance you give them when market is bearish. Rating Scale 1 to 5, 1= Least important, 2= moderately important, 3= important, 4= highly important, 5= utmost important
S.N. STATEMENTS 1 2 3 4 5

Industry Factors Company Factors

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Ideology of political party in government Impact of regulation & policies Corporate governance Liquidity Position Capital adequacy Earning per share Interest spread Cost of fund Profitability Loan portfolio size Loan loss provision Dividend history size of deposit Non-performing loan Number of branches Management Team Directors in Board Overall image of bank/brand name years of operation

6. Being an investor the source of information you consider worth is (Please select all that apply) Statement S.N. 1 Research report published by individuals and institutions 2 3 4 5 6 7 8 Recommendations/suggestions from brokers Investment management service providers Self- research Research web sites News papers Tips from relatives/friends Others sources (Please specify) Tick below

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Appendix B List of brokerage firm visited during the survey S.N. Brokerage Firm 1 Kumari Securities Pvt. Limited 2 Opal Securities Investment Pvt. Limited 3 J.F. Securities Company Pvt. Limited 4 Pragyan Securities Pvt. Limited 5 Malla&Malla Stock Broking Company Pvt. Limited 6 ABC Securities Pvt. Limited 7 Sagarmatha Securities Pvt. Limited Address Dillibazar,Kathmandu Putalisadak,Kathmandu Putalisadak,Kathmandu Kamaladi, Kathmandu Dillibazar,Kathmandu Indrachowk,Kathmandu Putalisadak,Kathmandu Phone No. 01-4418036 01-4239273 01-444291 01-6226890 01-4432088 01-4230787 01-4433221

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