CHAPTER 1

THE PROBLEM AND ITS SCOPE

RATIONALE OF THE STUDY

The Philippine Stock Exchange (PSE) facilitates the buying and

selling of stocks and other assets by acting as the country's leading center

for stock market investments. It is essential to the nation's financial

system because it enables businesses to obtain funds and shares from the

general public and enables investors to expand these businesses.

According to (Duran, 2019), Economists and decision-makers generally

agree that the stock market plays a crucial part in expanding developed

and emerging nations' economies. Having shares is a significant way to

put money aside and build wealth.

One way to define literacy is a person's ability or knowledge that

can help us understand information. Students today generally perceive

investment as essential to building wealth and financial security, often

influenced by accessible information and tools for managing personal

finances and understanding market trends. "The ability to successfully

manage financial resources by applying knowledge and skills to sustain

financial well-being throughout life.." is the definition of financial

literacy. (Lusardi and Mitchell,2008).

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 A recent survey(News, 2020) indicates that 75% of Filipinos do not

own any investments. Investment participation has slowly increased,

especially among younger generations, but total engagement is still low.

There is still a need for development in financial knowledge and stock

market involvement, as seen by the fact that the percentage of Filipinos

investing rose by just 2% between 2017 and 2019, from 23% to 25%. In

today's quickly expanding economic world, particularly in the stock

market, people—especially students—use various technological strategies

to boost their investments. This research examines how investment

experience and financial literacy impact investment-related judgments.

Krische, S. D. (2019).

This study's concentration on University of Cebu Main students

with prior stock investment experience creates a gap. The study

investigates if their perceived level of investment literacy will be

sufficient to help them succeed when they venture into the larger world of

investments. It also examines whether their present knowledge and

abilities provide a solid basis for handling any obstacles they might

encounter when their investment activities grow. This survey can also tell

us whether students know enough to deal with complex financial systems

and stock investing or if they think more real-world experience is needed.

Research on the impact of early exposure to stock investing on students'

long-term financial behaviors and financial education's influence on

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confidence and decision-making. Young investors are increasingly

interested in investing due to easy access to financial information through

digital platforms and social media.

Stock market has a huge influence towards the growth of the

Financail institution aspect wherein it established and functional helps a

country to accumulate capital and allocate resources effectively, so

maximizing output to progress and enlarge it.

According to the firms, large enterprises could raise money for

their growth and development through the stock market. The stock

market offers a range of options to individual investors through diverse

securities that transform investments into more advantageous assets.

(Arena, 2023).

Students can manage their finances efficiently, make wise judgments, and

comprehend the economic backdrop because they have a solid

understanding of personal finance, investment techniques, and economic

fundamentals.

The researchers conducted this study as they could personally

relate to student stock investors, having themselves been introduced to

stock investment in a previous semester. With the help of this research,

student investors will have a great chance to learn the value of

diversifying their portfolios and to increase their understanding of stock

investment techniques.

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 The purpose of this study is to determine whether or not students

feel that they are sufficiently prepared for the dangers involved in

investing by gauging their perceived degree of investment literacy.

The findings of this study could greatly impact stock investment practices

by improving students' financial literacy. This, in turn, will empower

them to make informed choices, effectively manage investment risks, and

navigate complex markets. It also promotes long-term financial stability,

helping students build wealth and take advantage of compound growth

opportunities. Incorporating financial literacy into stock investing

education equips students with the necessary skills for wise financial

decisions.

Theoretical Background

This study is primarily anchored in The Social Cognitive Theory

by Bandura (1960), supported by the Theory of Planned Behavior Ajzen

(1985). Moreover, this research supports the Social Learning Theory

developed by Bandura. and the Self-Determination Theory by Richard

Ryan and Edward Deci (1980S)

Social Cognitive Theory states that human behavior and motivation

are heavily influenced by awareness. Expectations using this anticipatory

control system might refer to outcomes from acting. Bandura addressed

processes and social effects, especially in his studies on observational

learning. This helped concepts like reciprocal determinism and self-

efficacy to get into control. The first element is perceived self-efficacy,

which relates to people's opinions about their ability to complete a certain

action required to reach a desired outcome. The second fundamental

concept of SCT is expectations, which deals with people's ideas regarding

the potential repercussions of what they did. Apart from these two

cognitions, SCT additionally comprises(Conner & Norman, 2015)

According to this theory, people pick knowledge not only from

their own experiences but also from watching and copying the conduct of

others. Regarding financial management students, their perceived stock

investment knowledge is molded by seeing professionals, classmates, and

faculty members. According to Social Cognitive Theory, students absorb

the value of stock investment literacy by observing others interact with

investing, control risk, examine data, and realize rewards. Throughout a

person's life, financial decisions change, and hence, customized financial

and investing education is needed at every level. (Veena et al., 2022)

Social cognitive theory offers a valuable perspective on how

investors learn and behave. By understanding the factors influencing

investor behavior, we can develop strategies to promote rational decision-

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making and improve financial outcomes. That behavior was probably

controlled by an external stimulus that collaborated with the embedded

organismic state. This theory implies that by understanding how their

ideas, self-efficacy, and observational learning affect their financial

practices, Financial Management students of the University of Cebu

should be better aware of their own effect.

Moreover, the outcomes of students' individual stock investment

experiences shapes their impressions. . Whether their experiences

produce good or bad results, these outcomes are crucial in determining

how these people see the need for stock investment literacy. The theory

proposes that investing skills, risk management, data analysis, and return

on investment are influenced by students' personal experiences and their

observations of others, reinforcing the significance of experiential and

observational learning in developing financial expertise.

According to the Theory of Planned Behavior, attitudes, subjective

standards, and perceived behavioral control shape people's intentions and,

hence, their behaviors. Financial Management students at the University

of Cebu have a positive attitude toward investing, which is associated

with financial security or personal growth and increases the likelihood of

investment. On the other hand, a negative attitude resulting from

misinterpretation or fear reduces it. Social forces can inspire or

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discourage investment; positive impacts increase intentions; negative

perceptions limit them. Lastly, their intentions are much influenced by

their confidence in their investing capacity and availability of financial

resources; better self-efficacy increases the possibility of investing.

TPB can assist in explaining how students' intents to obtain and

apply stock investment information may be influenced by their

perspectives toward the importance of this knowledge, as perceived in

this study. Perceived literacy in stock investing, which includes having

key skills such as data analysis, risk management, understanding return

on investment, and investing abilities being knowledgeable or skilled in

these areas is crucial for making informed investment decisions.

In a financial context, TPB suggests that students' beliefs about their

ability to acquire and competently use stock investment knowledge will

directly impact how valuable they perceive stock investing skills to be. In

other words, if students feel confident in their ability to understand and

apply stock investment concepts, they are more likely to view this

knowledge as important and worth acquiring. However, personal attitude

is an important variable in maintaining one's motivation to invest

(Nurhayani et al., 2022)

TPB helps researchers explore how individuals' perceptions of their

skills and knowledge (in this case, stock investment literacy) shape their

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overall approach to investing. TPB is an effective theory for studying

how financial management students perceive the importance of different

competencies in stock investment and how these perceptions influence

their actual investment behaviors.

Another supporting theory of this study was Self-Determination

Theory (SDT) This view emphasizes the fundamental, inner forces

guiding people's behavior. It suggests that people are more likely to

engage in intrinsically exciting events that satisfy their criteria for

relatedness, competence, and autonomy. When it comes to stock

investment information, SDT can assist in explaining why students might

think it's significant, particularly if they think it will help them reach their

financial objectives or advance their personal development. The theory

Self-determination primarily concentrates on self-determined or volitional

behavior, as well as the social and cultural contexts that support it. (Ryan,

n.d.)

Students feel confidence in their capacity to comprehend and

participate in investing, have a strong desire to handle their financial

activities freely and value the support of their fellow students, families,

and communities. While intrinsic motivation is quite important and shows

personal satisfaction and interest in investing, high degrees of

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commitment reflect a great dedication to ongoing investment activity.

(Abu et al., 2024)

Self-Determination Theory suggests that financial management

students who are engaged in stock investing may perceive stock

investment knowledge as important if they believe it will help them

achieve their financial or investment goals, or contribute to their personal

growth. According to this theory, students are more likely to value stock

investment knowledge if they feel autonomous in their learning and

decision-making process. If students believe they could acquire and

effectively use stock investment knowledge, they are more likely to

recognize its importance in reaching their goals and advancing their

financial skills. Nonetheless, the value of institutional support comes

from its capacity to inform, promote community development, and

provide investment opportunities allowing students to make autonomous

decisions. (Situmorang & Nugraha, 2024)

Review of Related Literature

According to Aren & Canikli (2019), this study aims to obtain

fresh evidence regarding the comprehension of individual investors'

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financial instrument choices. At this point, a selected group of variables

that the behavioral finance literature assessed to be relevant were used.

This study explains how new insights into behavior and decision-making

processes might be gained.

Finance students are often seen as having a higher level of

knowledge and expertise in financial and investment matters than

individuals from other disciplines. However, it is essential to explore

whether this perceived level of expertise translates into actual stock

investment literacy. Based on the analysis of (Romadona & Setiyono,

2021). This is why the perceived level of stock investment among

students is essential in preparing for their future ventures. To improve

students' financial literacy and guarantee that they are prepared to make

wise investment decisions, educators and legislators should consider

students' information and abilities in this area. Several studies have

assessed the perceived level of stock investment literacy among FM

students. One such study (Khan, 2016)

The risk management an individual perceives will be essential in

determining how much to invest in that particular chance because it

represents how much they are willing to roll into the respective

investment. When one considers their investment hazardous, they will be

eager to put little in it. When an individual perceives themselves as

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having a high literacy on investing, this will eventually affect investing in

higher amounts as well as taking risks in general. There are many factors,

including the investor's history, objectives for raising capital, and general

state of economic conditions, that influence his perception of the

associated risk of any investment. The best way any investor can make

more effective decisions for strategic investments that support financial

goals is by understanding and assessing individual risk tolerance.

Decisions about investments are also influenced by an individual's

perception of risk. The student's resilience toward managing risk has a

notable impact on the stock investment and the total money

invested(Saputro & Lestari, 2019).

Student investors are enabled to effectively manage cash flow,

lower risks, and use sound financial practices. These not only benefit

their businesses but also provide them access to personal FL skills such as

budgeting and profitability analysis; long-term financial success depends

on both. (Ribaj, 2020).

As stated by Keller and Siegrist (2006), a person's money-related

mindset, moral position about the stock market, and financial risk

mindset have a significant impact on their propensity to make stock

investments. According to Keller and Siegrist's (2006) theoretical

structure, the current study addresses these elements and how they affect

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people's willingness to purchase stocks and determines the effect of

financial literacy on the propensity to make stock investment

The Literature covers the significance of an organization's risk

culture. A strong risk culture is essential to successful risk management

since it encourages a proactive approach to risk identification and

mitigation. Consequently, (Asry et al., 2024) examined the fact that

Investment experience contributes to the beneficial effects of financial

literacy on investment decisions, and financial literacy moderates the

influence of risk perception.

According to (Jackson, 2010). A sensible decision-making method,

considering the complexity of handling uncertainty, is reflected in the

streamlined decision-making process. Though many of these inputs

reflect assumptions that are unclear in and of themselves, the analyst has

made every effort to characterize this uncertainty. This result shows that

Financial Management students reflects its assertions on how investors

realize their previous risk assessment. Previous investment can gain

reassessment their understanding of risk and its factors

An important term in the finance industry is return on investment,

or ROI. These indicate whether an investor made a wise choice in

purchasing a specific asset by measuring the profitability or efficiency of

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an investment. Return on investment is a key factor in deciding whether a

stock investment is successful or unsuccessful.

The research by Hooks (2009) contrasted the attitudes, sense of

control, creativity, leadership, and self-assurance of novice and seasoned

business owners, and how these attributes connect to life satisfaction. It

was shown that whereas seasoned investors view their past mistakes as a

chance for improvement, novices are more content with life overall.

According to Lusardi and Mitchell (2007), The perceived level of

stock investment literacy among finance and management (FM) students

is a critical factor to consider when preparing them for their future careers

in the financial sector.

The ability to invest in equities is contingent upon your ability to

make informed judgments in the financial markets. This encompasses a

wide scope of topics, including technical analysis and portfolio

diversification, as well as more fundamental topics, such as stock

valuation, market trends, and economic indicators. Research has

connected better risk assessment, effective portfolio management, and the

accomplishment of financial goals to higher investing literacy. Therefore,

two methods the government may use to improve investment

surroundings are open business information and fair trade policies. (Lai,

2019).

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 According to Christelis et al. (2010), stocks are information-

intensive assets, and decisions on the allocation of stocks are based on the

availability or limitations of information. Investor with lack of

information and the disability to process information can manifest the

information limitation. A lower level of knowledge could be partly offset

by information gathered through other channels, as participation in the

stock market depends on available information to an individual.

(Oyer 2008) discusses the significant effects that stock movement

has on the capital market. toward the job choices of business students.

Their choice to work in the financial industry based on the state of the

market. If the market performs exceptionally well, It will be promoted as

a career path for students. This illustrates the relationship. between the

state of the capital market and job opportunities inside it.

According to (Ho & Odhiambo, n.d.) saw notable changes and

reforms in the Philippine stock market, according to Ho & Odhiambo,

n.d., including the merger of two stock exchanges, the conversion of the

Philippine Stock Exchange (PSE) into a publicly traded company, and the

application of the Securities Regulation Code. Over the years, these

developments have helped the market to grow somewhat steadily.

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15
Statement of the Problem

The purpose of this study is to determine the perceived level of

stock investment literacy among Financial Management students at the

University of Cebu - Main Campus. The study findings will be the basis

for propose measures.

Specifically, this study will seek to answer the following questions:

1. What is the profile of the participants in terms of:

1.1. age;

1.2. gender;

1.3. civil status; and

1.4. year level?

2. What is the perceived level of stock investment literacy among FM

student at university in term of?

2.1. risk management;

2.2. data analysis;

2.3. return on investment; and

2.4. investing skills?

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3. Is there a significant relationship of the profile of the respondents and

the perceived level of stock investment knowledge?

4. Based on the study findings what measures may be proposed?

Statement of the Null Hypothesis

There is no significant relationship between the profile of the

respondents and the perceived level of stock investment literacy among

FM students

Significance of the study

This study will be beneficial to the following:

Researchers. This research will help determine if students feel

confident in making informed decisions about investing in stocks. The

goal is to see if students have the knowledge and skills needed to navigate

the complexities of stock investments. By studying this topic, researchers

can provide recommendations on how to improve stock investment

literacy among finance and management students. Ultimately, the

research aims to help students become more knowledgeable and

confident investors in the stock market.

Students. This research can also benefit students by

highlighting areas where they may need to focus on improving their

literacy in stock investments, ultimately leading to better investment

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outcomes. By learning about their level of knowledge on this topic,

students can improve their own understanding of stock investments and

make more informed decisions in the future.

Investors. This research can help investors make informed

decisions about where to allocate their funds and which students may

have a better understanding of the stock market. By understanding the

level of investment literacy among FM students, investors can tailor their

strategies and resources to better support and guide these future investors.

Future Researchers. Studying the perceived level of stock

investment literacy among FM students can help future researchers

understand how well these students understand and make decisions about

investing in stocks. This research can provide valuable insights into the

effectiveness of financial education programs in universities and help

identify areas for improvement. By exploring this topic, researchers can

contribute to the knowledge and understanding of how to better prepare

FM students for making informed investment decisions in the future.

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 RESEARCH METHODOLOGY

This chapter presents the whole description of methodology used in

gathering data and analysis which are relevant to the research. This

methodology will include to discuss areas of the research design, research

environment, research instrument, data gathering procedure, and the data

analysis.

Research Design

This study uses a quantitative research design which gathers quantifiable

data, statistical method and computational. This quantitative research

design will determine the perceived level of stock investing literacy

among BSBA-FM students in a university, by using survey questionnaire

distribution and it gathers data where can be presented numerically.

The following schematic diagram shows the research process:

INPUT PROCESS OUTPUT

 Quantitative
 Group
Research design
Respondent’s  Self-made
Profile questioner
 Data Gathering
 Proposed
 Perceived level of  Data Processing
measures
stock investment  Frequency &
literacy among Percentage
FM students Distribution

Figure 1. Research Flow

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Research Environment

This study will be conducted in the University of Cebu-Main Campus

Don Manuel Gotianuy second floor and third floor building. It is located

in at Sanciangko Street, Cebu City, 6000 Cebu. The University is a

private, non-sectarian, primary, and coeducational basic and higher

education institution in Cebu City, Philippines. The university is widely

recognized for cultivating exceptional students across various academic

disciplines, securing its position among the top 10 educational institutions

in the Philippines.

Research Respondents The research respondents of this study are three-

hundred (300) coming from the 3rd year and 4th year BSBA-FM college

student from The University of Cebu-Main who are engage in stock

investment.

Research Instrument

The researcher makes a self-made questioner that will be use to survey to

collect data from the respondents. The questioner is the instrument of the

research that contains some questions that collect information from the

particular respondent. Every question contains option available. This

questioner survey is designed to elicit detailed, quantitative data from the

respondent regarding their perceived level on the stock investment. The

questioner survey used in closed-ended to elicit straightforward, limited

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responses from the respondents. The frequency percentage distribution

indicates as an observation for each data points.

Data Gathering Procedure

Before the researchers conducted the study, permission was secured by

writing a transmittal letter to conduct the study at the University of

Cebu’s Main Campus. The questioners survey is personally made by the

research was presented, analyze and checked by the research adviser to

ensure the validity of responses it would elicit. The researchers obtained

permission from respondents to conduct the research and gain the

necessary information. After acquiring consent, the researchers will

describe the study’s purpose to the consenting individual so as to verify

each participant fits the provided criteria. The questionnaires were

collected right after they have been answered by the respondents. The

researchers will provide monitoring to ensure that any personal

information of the respondents will remain confidential. The respondent’s

age, gender, level that will be used by the researcher to gathers data. The

gathered data were tallied, analyzed and interpreted.

Treatment of data. Once all significant data has been gathered. It will be

collected, tallied, and organized. The researcher will use frequency of

data, weighted mean, and chi-square test of independence in statistical

treatment to process the data.

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Frequency of data. This refers to compile the result of survey

questionnaire from the respondent’s responses.

Weighted Mean. it is used to measure and analyze the answers of the

respondents in perceive level of stock investing.

Chi-square Test of Independence. This refers to the significance use to

determined the relationship between the respondent’s profile and the

perceived level of stock investing literacy among financial management

college student.

Frequency and percentage

It is imperative that the survey respondents grant their informed consent,

as per the guidelines of the research ethics office. The researchers are

committed to consistently ensuring the protection of data confidentiality

and fully acknowledging the privacy rights of the respondents. It is highly

important that the researchers conduct the study with honesty and

integrity, reporting results accurately and not falsifying data. And lastly,

ensure that the research findings are presented accurately, without

exaggeration or manipulation, including the negative results.

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 DEFINITIONS OF TERMS

For a better understanding of the study, the researchers supplied essential

terms to better help respondents understand the study. The following

terms are defined in the context of this research

Perceived level of stock investment: Refers to the perceived level of

stock investment literacy of the college students in terms of risk

management, data analysis, return on investment, and investing skills.

Profile of the respondents: Refers to the significant background of

respondent profiles in term of age, gender, civil statues, course, and year

level.

Proposed Measures: This refers to activities/plans that may improve the

skills of the FM students

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