Behavioural Factors Influencing Investors - An Underpinning on Equity Markets

Authors

  • Editor AJMS

Keywords:

Behavioural Finance, Investor awareness, Risk perception, Behavioural factors

Abstract

The aim of this research is to examine the key factors determining the awareness and risk perception of investors. This paper also identifies the influencing factors of investor behaviour. Extensive literature reviews prove that investor awareness, risk perception and behaviour plays a foremost part in investment decisions. Based on exploratory study, Investor awareness is classified into four factors such as Media, Social learning, Financial awareness and Company information. Risk perception is identified with four factors such as Precautious, Fear of loss, Courageous and Rational thinking. Behavioural dimension has 11 factors such as Anchoring, Loss Aversion, Status Quo, Mental accounting, Framing, Hindsight Cognitive dissonance, Representativeness, Conservatism, Self-confidence and Illusion of control.The study is conducted with a sample of 386 retail investors in Chennai city. Descriptive statistics and Factor analysis are performed to analyse the data. The results indicate that investors depend on the media and social learning as a source of information. Their risk appetite is moderate and does rational thinking while choosing their investments. Behavioural bias such as Illusion of control, Cognitive dissonance, Anchoring and Hindsight are the decisive factors for investors to formulate their investment choice.

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Published

2021-01-14

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Section

Articles