Factors Influencing Investment Decision Making Process A Select Study

Abstract

The process of Capital Formation (Saving and Investment) is of prime importance for newlineany country and same is true with India. It is considered as the fuel for growth engine newlineof any economy. Gross Domestic Capital Formation as a percentage to GDP at current newlinemarket price in India was 31.4, in the year 2017-18 (RBI Annual Report, 2017-18), with newlinea household share of just 12.1 (RBI Annual Report, 2017-18). A high growth in capital newlineformation rate cannot be expected without active participation of households. Despite newlineof the excellent per capita income growth of India in last few years, households share newlinein the saving-investment process has not increased significantly. To increase the newlinecontribution of households in the process of capital formation in India, importance of newlineunderstanding investment behaviour of Indian households has been felt. Therefore, the newlinebasic purpose to carry out this research is to explore the aspects and factors related to newlineinvestment behaviour of individual households. During the literature review it has been newlineobserved that apart from demographic and cognitive factors there are many newlinepsychological and behavioural factors which have their influence on the behaviours of newlinehousehold investors. A gap has been identified in literature for understanding the newlineinfluence of such factors on Indian household investors. Therefore, this study is newlinedesigned to collect the primary data from Indian household investors related to selected newlinepsychological and behavioural factors and to observe their impact on investment newlinebehaviour of individual investors through statistical techniques like Descriptive newlinestatistics, Chi-square test, ANOVA and Multiple Linear Regression. After an exhaustive newlineliterature review and data analysis it has been found that such psychological and newlinebehavioural factors have a huge impact on decisions of households related to newlineinvestment and should be dealt properly by policy makers to enable the household newlineinvestors to increase their participation in capital formation process of the country by newlineinvesting more in fixe