International Journal of Business Ethics in Developing Economies

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An Empirical Study on Chit Fund Crisis in Tripura


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1 Department of Commerce, Tripura Central University, Suryamaninagar, West Tripura, India
     

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The study examines the motivating factors of the respondents for investment in chit funds, perception towards chit fund companies and strategies to properly manage chit funds of Tripura. It obtained primary data from 160 respondents from all the eight districts of the state using quota and convenient sampling technique through questionnaire and personal interviews. Different statistical tests like Mann-Whitney U test, Pearson's Chi-square test, factor analysis like Principal Component Analysis were performed to assess support for the hypotheses. The reliability of the questionnaire and sample adequacy test was also carried out.The results of data analysis reveal that exorbitant rate of interest offered by chit fund companies, lack of industrialisation, financial illiteracy and rigid banking formalities are the key motivating factors for investment. The study indicates that excessive greed, absent of Government's small investment schemes, multiregulations, political patronage, weak Chit Fund Act are the causes behind scams and frauds. The study further emphasizes on provision of CAG audit,proper coordination among regulators, inclusion of Government's nominees in the Board of Management of chit funds, exercising control in the scope of operations as well as investors' education.

Keywords

Collective Investment Scheme (CIS), Chi-Square Test, Mann-Whitney U Test, Descriptive Statistics, Rotated Component Matrix.
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  • An Empirical Study on Chit Fund Crisis in Tripura

Abstract Views: 344  |  PDF Views: 2

Authors

Rajat Deb
Department of Commerce, Tripura Central University, Suryamaninagar, West Tripura, India

Abstract


The study examines the motivating factors of the respondents for investment in chit funds, perception towards chit fund companies and strategies to properly manage chit funds of Tripura. It obtained primary data from 160 respondents from all the eight districts of the state using quota and convenient sampling technique through questionnaire and personal interviews. Different statistical tests like Mann-Whitney U test, Pearson's Chi-square test, factor analysis like Principal Component Analysis were performed to assess support for the hypotheses. The reliability of the questionnaire and sample adequacy test was also carried out.The results of data analysis reveal that exorbitant rate of interest offered by chit fund companies, lack of industrialisation, financial illiteracy and rigid banking formalities are the key motivating factors for investment. The study indicates that excessive greed, absent of Government's small investment schemes, multiregulations, political patronage, weak Chit Fund Act are the causes behind scams and frauds. The study further emphasizes on provision of CAG audit,proper coordination among regulators, inclusion of Government's nominees in the Board of Management of chit funds, exercising control in the scope of operations as well as investors' education.

Keywords


Collective Investment Scheme (CIS), Chi-Square Test, Mann-Whitney U Test, Descriptive Statistics, Rotated Component Matrix.

References