Factors Accountable for Non-Participation in the Stock Market: Identification and Ranking

Non-Participation in the Stock (NPS) market is a serious concern especially with the rising burden of debt in general and NPA in particular in the Indian economy. This paper is an attempt to address the problem of NPS. Identification of factors accountable for NPS is the first step to resolve the problem. Ranking is obviously the second step so that the problem can be resolved in the sequential manner. The current study identifies: willingness to invest, cash availability, knowledge of the equity market, expectation of returns, trust on the market and risk in the market. The factors are delineated in the order of the priority. Willingness to invest in the stock market come out to be more important reason for NPS and risk in the market happens to be the least important factor in the pecking order of factors for NPS. A multi-criteria decision making tool, Analytical Hierarchical Process (AHP) is applied to set the identified factors into the order of their relevance for NPS. The findings of the study have unique attributes in terms of newer set of factors and the method of ranking them. The relevant factors for NPS identified in the current study can be responded with the appropriate change or revision in the guidelines and policies to address the problem of NPS. Moreover, one of the major implications of the study is that the factors can be taken care of in the step wise manner as compared to taking up all at the same time.