KNOWLEDGE, ATTITUDE, BEHAVIOR, PERCEPTION AND PUBLIC PATRONAGE OF FINANCIAL ASSETS/INVESTMENT IN CAMEROON: THE CASE OF YAOUNDE, DOUALA AND BUEA

Abstract

The study examined knowledge, attitude, behavior, perception and public patronage of financial assets/investment in Cameroon. Four research, objectives were formulated and transformed into hypotheses. The hypotheses investigated the relationship between knowledge of financial assets, attitude toward finance assets, behaviour toward financial assets; perception of financial and public patronage of financial asset.  Survey research design was adopted for this study. A well validated structured questionnaire was used of 470 respondents. The data were analyse using simple percentage multiple regression analysis with the help of Statistical Package for Social Science (SPSS). The findings revealed that   knowledge of finance asset, attitude toward finance asset, behaviour toward finance asset and perception of financial assets are significant predictors of public investment in financial assets (R2 =0.6582, P<0.05). Recommendations such as investors diversifying their portfolio to reduce risk and the study are conducted with a more significant sample to have more credible results were made.

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

Investment is the deployment of a fund with the aim of achieving additional income or growth in capital value. Investment is an investing activity that attracts all people irrespective of their occupation, education and social status. An understating of the core concepts and a thorough analysis of the options can help investors to create a portfolio that maximises returns while minimising risk exposure. The general concern and focus of the financial advisors and government are to see that every individual needs to invest and earn returns on their idle resources and create a specified sum of money for a precise goal in life and make a provision for an unclear future. The financial investment is the obligation of funds that is expected to yield some gain over a period of time. If a person has more funds than his current needs, he can deposit the surplus money in the bank to earn a fixed rate of interest or buy gold or purchase shares or invest in any other form of financial instruments. In other words, investment is allocating of monetary resources to assets that are expected to yield some gain or positive return over a period of time. The assets may range from safe investment to risky investment. The nature of investment in the monetary logic differs from its use in the economic sense. To the economists, investment means net addition to the economy’s capital stock which comprises of goods and services that are used in the creation of other goods and services. In this perspective, the word investment, therefore, implies the formation of new and productive capital in the form of new construction, new products and durable equipment. Inventories and human wealth are included in the economists’ definition of investment. Customarily investment is well-known from speculation in three ways. Speculation brings in its wake risk, capital gain and period of time.  (Diacon, 2004)

The term risk refers to the probability of incurring a loss in a financial transaction. In investing in shares, if purchases of securities are preceded by a proper investigation, analysis and review they will receive a stable return over a period of time. Such an act is called investment. In India, investors have the dual advantages of free enterprises and government control. Freedom and growth are ensured by the competitive forces of private enterprise. On the other hand, being a fixed economy, government control exerts discipline and curtails some elements of freedom. A public sector left free to operate hope to achieve the benefits derived from both socialistic and capitalist forms of government. But such an independent public sector brings in disadvantages also. In India, the administrative climate is favorable to investment as government controls lend stability to the capital markets. The achievement of every investment decision has become more and more important in recent times. Making rigorous investment decisions require both awareness and expertise. Skill is needed to evaluate the risk and return associated with an investment decision. Knowledge is required to analyse the complex investment alternatives available in the economic environment. The main aim of investors is to get capital appreciation and fixed returns. The capital appreciation happens when an investment is sold out at a higher price as related to the original purchase price of an investment. The regular return from the investment is derived in the form of interest or dividend. Before making an investment, the investors are considering different factors such as financial, political, economic, market conditions and psychological environment. (Kumar, June 2014, Vol 2, N0 2v)

Nowadays, investors have before them the wide range of investment opportunities such as equity shares, fixed returns securities, deposits, tax benefits saving schemes, units of mutual funds, insurance schemes, gold and real estates. Out of the various investment opportunities available, the investment on equity shares is considered to be more rewardable and more risk-prone. However, many investors in India are coming forward to invest their hard earned money in equity. In this context, the present study highlights the investors’ attitude towards the stock market in Madurai city. This study mainly focuses on the awareness of the investors’ in respect of the stock market and features to be considered beforehand investing in the market. Besides, it has also been analysed about the investors’ satisfaction regarding investment in the stock market

The influence of risk awareness on the investment decisions of a prudent investor is an emerging subject in the behavioral finance literature. A risk is an inborn feature of all forms of financial investments. It is the probability that the authentic return on investment will be lower than the expected return.

Perception is the manner by which an individual is in search of pre-eminent elucidation of sensory information so that the investor can make a final verdict based on their level of expertise and past practice. The concept ‘risk perception’ means the way in which investors view the threat of financial assets, based on their concerns and experience. Risk perception is the conviction, whether rational or irrational, held by an individual, group, or society about the chance of manifestation of risk or about the extent, magnitude, and timing of its effects is a critical success feature that promotes effective decision-making in uncertain situations. Confusing the analysis of financial risk is the fact that each investor has his or her own tolerance of risk and perception towards risk. The risk perception of investors is an essential factor that influences investment decisions.

Investment choice generally means the determination made by stakeholders as to where, when, how, and how much capitals will be invested on numerous avenues of financial products/instruments with the objective of creating income or obligation in value. Here, the concept of investment decision is defined as the decision taken by individual investors while investing in mutual funds. The behavioral finance scholars found out that unavoidable psychological and emotional factors could influence decisions. A better understanding of these features will aid the investors to take an appropriate investment decision and also benefit them to avoid their repeating errors in future in extracting the finest financial investment opportunity. Usually, investors are evaluating the risk and return of an investment decision. The decision-making behavior of a stockholder is affected by their attitude concerning risk. At different stages of perception towards risk, the individual investors think contrarily about their investment and make decisions differently. Investors take threats according to their understanding and awareness which eventually affect their behavior towards risky investment decisions. In this condition, in the current study, an attempt is made to examine the impact of risk perception of individual investors on their savings in mutual funds. (Noel Capon, 1996).

1.2 Statement of the Problem

Investment values among the individuals of a country are an essential requirement for capital formation and faster growth of an economy since the aggregate of savings is the source of investment in the economy. Every individual has a unique portfolio of spending their income, and the investment culture is influenced by the investors’ behavior, attitude and perception of risk about their investment decisions. Capital formation happens in the economy as a result of investments in the capital market. The choice of alternative forms of investments is dependent on a variety of factors which include; knowledge, attitude, perception and behavior. These features may differ from person to person.

However, investors’ behavior preferences are solid to observe and measure directly due to their dynamics, uncertainty, heterogeneity and uncertainty. It is hard even for institutions to obtain such information from individual stockholders due to legal restrictions. However, some private characteristics of investors such as demographic characteristics are much easier to access and measure legally than the behavioral data. Applying some easy-to-obtain personal characteristics as predictors to build models to assess investors’ behavior preferences may be a solution to this problem.

1.3 Research Objectives

The main objective of this study is to examine the relationship between Knowledge, attitude, behavior, perception and public patronage of financial assets and investment in Cameroon

The specific objectives of this study are:

To investigate the relationship between knowledge of financial and public patronage of financial asset

To investigate the relationship between attitude of public towards financial and public patronage of financial assets

To investigate the relationship between the behavior of the public towards financial assets and public patronage of financial asset

To investigate the link between the perception of the public about financial assets and public patronage of the financial asset