Relationship Between Risk Aversion Of Individual Investors And Stock Market Participation Decision Among Secondary School Teachers From Nakuru County, Kenya

Abstract

Participation in the stock market is important to the general economy and to individual investors. Despite the benefits of stockholding, few individuals participate in the stock market. Many researches have tried to provide explanation the reason why few individuals participate in the stock market. There was need to investigate the relationship between risk aversion and individual investor stock market participation decision among secondary school teachers in Nakuru County. The study employed explanatory research design and data was collected from 320 teachers that were selected using stratified proportionate random sampling technique. Primary data was collected using structured questionnaires. Inferential statistical techniques which included Pearson correlation coefficient and regression analysis were used to analyze the data with the aid of SPSS. The research findings found that risk aversion has a significant positive relationship with stock market participation decision of secondary school teachers in Nakuru County. The study concluded that risk aversion of individual investors has a significant relationship with stock market participation decision among secondary school teachers from Nakuru County. The study recommends that the citizens should be enlightened on the benefits of diversification and on risk analysis so that they can avoid making investment mistakes that can result in losses.