Examining drivers and deterrents of individuals’ investment intentions: a qualitative multistage analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rupali Misra ◽  
Puneeta Goel ◽  
Sumita Srivastava
Keyword(s):  
Financial Literacy ◽  
Service Industry ◽  
Financial Service ◽  
Ease Of Use ◽  
Individual Investors ◽  
Content Type ◽  
Multi Stage ◽  
Retail Investors ◽  
Investment Intentions

Purpose Even after appreciating multi-faceted merits of retail participation in stock markets and extensive efforts by policymakers and financial service industry to increase it, the present low retail participation in Indian stock markets is cause of grave concern. The purpose of this paper is to identify plausible drivers and deterrents of prospective and current household individuals through a multi-stage qualitative enquiry. Design/methodology/approach Two qualitative studies are conducted. In Study 1, scholarship of stakeholders is engaged through participative diamond model to propose behavioural classification of retail investors based on two-parameter framework. In Study 2, behavioural substructures of retail investors that drive or deter investment intentions and actions are identified through in-depth interviews. Findings Financial self-efficacy, past experience (own or peer group), financial eco-system, operational literacy, higher charges by financial experts and low liquidity in the hands of the investors are some key factors that influence investment intension and action of individual investors. Though digital platforms have helped to overcome hurdles faced by an investor but its availability, awareness and ease of use still remain a concern. Practical implications The inductive findings of this study uncover some important take-aways for the financial service industry – improve operational literacy, digital awareness, ease of use and incorporate risk assessments in client portfolios – and for the policymakers – improve investment eco-system through digital availability, financial literacy workshops focussed on operations. Originality/value To the best of the authors’ knowledge, this study is one of the initial attempts to adopt a multi-stage qualitative enquiry to propose behavioural classification of retail investors and uncover reasons that drive or deter individual investors’ intentions and actions in the context of Indian stock market. Moreover, this study provides necessary impetus to analyse and improve operational literacy (instead of financial literacy) and financial eco-system for higher retail participation.

Influence of human resource capital information disclosure on investors’ share investment intentions

2017 ◽  
Vol 46 (3) ◽  
pp. 551-571 ◽  
Author(s):  
Sugumar Mariappanadar ◽  
Alma Kairouz
Keyword(s):  
Performance Management ◽  
Human Resource ◽  
Information Disclosure ◽  
Banking Sector ◽  
Strategic Human Resource Management ◽  
Annual Reports ◽  
Individual Investors ◽  
Content Type ◽  
Investment Intentions ◽  
The Impact

Purpose The purpose of this paper is to apply the strategic human resource management (HRM) perspective to investigate the schematic relationship between the dimensions of human resource (HR) capital information and intentions to use such information in individual investors’ decisions relating to investing equities in the banking industry. Design/methodology/approach A two-stage empirical study was conducted in 2010 using a four-part HR capital disclosure questionnaire, which was developed and validated in stage 1 (n=145) of the study. In stage 2 (n=157), current or previous shareholders in one of the Australian banking sector corporations participated in the study. The collected data were analyzed using confirmatory factor and logistic regression analyses. Findings The findings of this explorative study highlight that the individual investors’ perception on the importance of performance management dimension of HR capital information has varied impacts on their intentions to use such information in investment decisions to buy, hold on to, or sell stocks. Practical implications This study has made an important contribution to the strategic HRM and behavioral finance literature that the human capital information facilitates the propensity to avoid regrets in selling shares too early (dispositional effect bias) to achieve utility benefits in future which is different from the findings of financial information disclosure study. Originality/value A recent critical review of HR disclosure indicated that most of the published articles on HR capital have used company annual reports for data source. However, this is the first study that attempts to understand the impact of HR capital disclosure information on investment intentions from individual investors’ schema rather than drawing data from company annual reports.

The influence of government support and awareness on rural farmers’ intention to adopt mobile government services in Tanzania

2017 ◽  
Vol 19 (1/2) ◽  
pp. 42-64 ◽  
Author(s):  
Herman Eliewaha Mandari ◽  
Yee-Lee Chong ◽  
Chung-Khain Wye
Keyword(s):  
Structural Equation ◽  
Ease Of Use ◽  
Government Support ◽  
Relative Advantage ◽  
Equation Modeling ◽  
Direct Influence ◽  
Content Type ◽  
Rural Farmers ◽  
Intention To Adopt ◽  
Multi Stage

Purpose Generally, this paper aims to develop a model by identifying factors which will assist policy makers in implementing m-government in Tanzania. The paper identifies direct and indirect factors which may influence adoption of m-government among the rural farmers in Tanzania. Design/methodology/approach The paper conducted a survey by using Drop Off/Pick Up method to collect data from rural farmers. Stratified and multi-stage sampling were used to collect 407 valid responses from rural farmers in Tanzania. Data collected were analyzed by using structural equation modeling (SEM). Findings The results show that government support has direct influence, while awareness has indirect influence through relative advantage, ease of use, compatibility and visibility. Furthermore, relative advantage, compatibility, ease of use, visibility and results demonstrability have direct influence on rural farmers intention to adopt m-government. Originality/value This study contributes to knowledge because no study in this area has been conducted in developing countries to examine factors that influence adoption of m-government. Furthermore, this study tests the mediating effects of perceived characteristics of innovation which have not yet been investigated to date.

Past behaviour, financial literacy and investment decision-making process of individual investors

2020 ◽  
Vol 15 (6) ◽  
pp. 1243-1263 ◽  
Author(s):  
Rajdeep Kumar Raut
Keyword(s):  
Decision Making ◽  
Financial Literacy ◽  
Structural Equation ◽  
Investment Decision ◽  
Individual Investors ◽  
Successful Implementation ◽  
Snowball Sampling ◽  
Content Type ◽  
Investment Decision Making ◽  
External Variables

PurposeThis study aims to explore the importance of past behaviour and financial literacy in the investment decision-making of individual investors and examines the validity of the theory of planned behaviour in this context.Design/methodology/approachThe study used a self-administered questionnaire and adopted the convenience sampling technique followed by a snowball sampling method for the survey to collect data from the individual investors covering the four distinct states of India. Collected data were analysed on AMOS 20.0 using two-step structural equation modelling (SEM).FindingsResults indicated a significant effect of all the predictive variables. Past behaviour showed no significant direct impact on investor's intention; however, it had an indirect significant relationship while mediated by the attitude of investors. The multiple squared correlation (R2) showed that the final model could explain 36% of the variance in investors' intention towards stock investment which signified a successful implementation of the TPB model along with external variables added to it. Moreover, Indian investors were found to be highly influenced, primarily, by social pressure which could be curbed through financial literacy.Practical implicationsA significant importance of subjective norms was found on stock market participation which could be a strategic theme for the government and the policymakers to educate investors through their opinion leaders for increasing their participation. Moreover, by doing so investors could control their behaviour and take rational decisions.Originality/valueThis study extended the understandings of investor's decision-making behaviour using TPB by incorporating the two external variables viz., Financial literacy and past behaviour. The addition of past behaviour is perhaps the novelty of this article since such examination has not been conducted empirically especially in the case of developing countries like India.

Exploring the relationship between investment choices, cognitive abilities risk attitudes and financial literacy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Mushafiq ◽  
Shamsa Khalid ◽  
Muhammad Khalid Sohail ◽  
Tayyebah Sehar
Keyword(s):  
Risk Aversion ◽  
Financial Literacy ◽  
Cognitive Abilities ◽  
Risk Attitudes ◽  
Positive Contribution ◽  
Content Type ◽  
Risky Investment ◽  
Investment Intentions ◽  
The Relationship ◽  
Investment Choices

PurposeThe main purpose of this study is to investigate the investment choices' relationship with cognitive abilities, risk aversion, risky investment intentions, subjective financial literacy and objective financial literacy.Design/methodology/approachTo examine the relationship, two investment choices were given to 256 subjects from Pakistan. Questionnaire had total 20 questions for measuring five variables. To review this nexus, discriminant analysis was used as to explore the depth of the nexus that is the ability of the variables to predict the investment choices.FindingsThis study establishes the findings that Investment choices are guided by risk aversion, risky investment intentions, financial literacy (subjective and objective) and cognitive abilities. The risk aversion has negative relation to investment choices and other variables depict positive relationship to with investment choices.Practical implicationsThis study provides a new and useful understanding into the existing literature on investment choices. The results are significant as the cognitive abilities show a positive contribution to the investment choices. This is point of significance as the portfolio managers and advisors would get help in regards of advising investments as they are aware what factors impact the investment choices.Originality/valueThis study is novel in its nature to evaluate investment choices using the cognitive ability alongside risk attitudes and financial literacy.

Rising US retail stock trading will draw modest reform

2021 ◽  
Keyword(s):  
Late Phase ◽  
Equity Markets ◽  
Financial Information ◽  
Individual Investors ◽  
Stock Trading ◽  
Content Type ◽  
Retail Investors ◽  
Media Channels ◽  
Financial Transactions ◽  
New Generation

Significance Late-phase bull equity markets invariably spawn a new generation of novice, casual traders. The surge in popularity of free stock trading apps such as Robinhood, combined with the growth of investing-focused social media channels, is influencing retail investment in a particular way this time around. Impacts Institutional investors will continue to drive the overwhelming majority of stock trading activity. Attempts to use the GameStop short squeeze to introduce a financial transactions tax will advance, but not far. Unprecedented access to more sophisticated financial information and trading tools will make retail investors more active investors. Digital financial apps ('robo advisors') that use artificial intelligence to manage individual investors' assets will continue to grow.

Individual investors’ intention towards SRI in India: an implementation of the theory of reasoned action

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rajdeep Kumar Raut ◽  
Rohit Kumar ◽  
Niladri Das
Keyword(s):  
Financial Performance ◽  
Financial Literacy ◽  
Theory Of Reasoned Action ◽  
Reasoned Action ◽  
Environmental Concern ◽  
Subjective Norms ◽  
Individual Investors ◽  
Moral Norms ◽  
Content Type ◽  
The Government

Purpose This study aims to explore and comprehend the reasons behind individual investors’ intention towards socially responsible investment (SRI) in the Indian stock market along with examining the validity of the theory of reasoned action (TRA) model to predict such phenomenon in the Indian context. Design/methodology/approach The TRA has been used as an underlying framework and has been extended by adding four variables, namely, moral norms, environmental concern, financial literacy and financial performance. The study used a self-administered questionnaire and adopted a convenience sampling method for a survey to collect the data from the individual investors from the capital cities of three states of India. Further, the collected data have been analysed using two-step structural equation modelling. Findings Results of this study indicate a significant impact of attitude, subjective norms, moral norms, financial literacy and financial performance on investors’ intention towards SRI; however, no significant relation was found between environmental concern and investors’ SRI intention. The multiple squared correlation (R2) shows that the final model could explain 71% of the variance in investors’ intention towards SRI, which signifies a successful implementation of TRA model along with new additions to predict investors’ decision-making behaviour for SRI. Moreover, investors are found to be highly concerned primarily about their financial goals and then for their personal obligation towards society as far as SRI is concerned. Practical implications This study reports significant and prominent importance of subjective norms in SRI which could be a strategic theme for the government and the policymakers to influence investors through their opinion leaders to promote SRI. The government should also increase its efforts to facilitate financial literacy among citizens. Originality/value Using the TRA model and four variables, namely, moral norms, environmental concern, financial literacy and financial performance addition to its original variables, this study extends the understandings of SRI which is perhaps the novelty of this paper because such examination of SRI has not been conducted, especially in the case of developing countries such as India.

scholarly journals Financial literacy and behavioural biases of individual investors: empirical evidence of Pakistan stock exchange

2020 ◽  
Vol 25 (50) ◽  
pp. 261-278
Author(s):  
Nosheen Rasool ◽  
Safi Ullah
Keyword(s):  
Financial Literacy ◽  
Stock Exchange ◽  
Individual Investors ◽  
Individual Investor ◽  
Chi Square ◽  
Content Type ◽  
Planning Decisions ◽  
Financial Decision ◽  
Financial Behaviour ◽  
The Relationship

Purpose Financial literacy is a crucial element of financial decision-making, exerting significant influence on the behaviour of individual investors, while making budgetary, house financing, stock investing and retirement planning decisions. So, the purpose of this research is to determine the relationship between financial literacy and behavioural biases of individual investors in Pakistan. Design/methodology/approach In this research paper, a sample of 300 observations was obtained through questionnaires from individual investors residing in Lahore and invested in Pakistan Stock Exchange. The data obtained, was passed through Cronbach’s Alpha and Exploratory Factor Analysis (EFA). The hypothesis developed for the research was tested by Pearson’s Chi-square and Ordinal Regression Analysis. Findings The hypothesis testing of the research concluded that there is a negative association between financial literacy and behavioural biases of individual investors. So, it means; with an increase in level of financial literacy, the likelihood of investor facing behavioural biases reduces. It also appeared that male respondents have more financial literacy than female respondents Originality/value Previous studies in the field of finance, identified different factors causing the financial behaviour of individual investor of Pakistan, and also focused on level of financial literacy in Pakistan, but these studies have not emphasized the crucial relationship between financial literacy and behavioural biases of individual investors. Thus, the unique empirical analysis developed in this paper has accentuated the financial literacy as a factor that mitigates behavioural biases of individual investor.

scholarly journals Fractional ownership – an alternative residential property investment vehicle

2018 ◽  
Vol 36 (6) ◽  
pp. 513-522
Author(s):  
Braam Lowies ◽  
Robert Brenton Whait ◽  
Christa Viljoen ◽  
Stanley McGreal
Keyword(s):  
Financial Literacy ◽  
Investment Decision ◽  
Residential Property ◽  
Individual Investors ◽  
Online Questionnaire ◽  
Content Type ◽  
Investment Decision Making ◽  
Education Levels ◽  
First Time ◽  
Alternative Investment

Purpose The purpose of this paper is to determine the profile of the typical online fractional residential property investor in Australia. This study also seeks to understand the motives for engaging with and investing in alternative residential property investments. Design/methodology/approach This study employs a survey-based design via an online questionnaire to gather information on investor age, gender, type, education levels, time horizons and investment history and risk and return expectations. It also gathers information regarding investors’ financial literacy including tax implications of fractional property investment. Findings The findings of this study suggest amongst others, that fractional property investors tend to be younger, although the platform also attracts older investors including older females. The study also found that investors do not select alternative investment platforms in anticipation of super-normal investment returns. Return expectations are realistic and are based on a balance between capital growth and income. Practical implications This study indicates that alternative investment platforms lowers the barriers of entry into residential property for first time investors. It therefore creates opportunities to allow many first time individual investors to invest in property, often as an alternative to bank savings or investing in the stock market. Originality/value This study enhances our understanding of the influence of alternative investment platforms on investment decision-making. More specifically, it contrasts fractional property investment with more traditional investment opportunities to understand the motives of investors for diversifying into online investment vehicles.

Overconfidence heuristic-driven bias in investment decision-making and performance: mediating effects of risk perception and moderating effects of financial literacy

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maqsood Ahmad ◽  
Syed Zulfiqar Ali Shah
Keyword(s):  
Decision Making ◽  
Risk Perception ◽  
Financial Literacy ◽  
Investment Decision ◽  
Investment Decisions ◽  
Individual Investors ◽  
Content Type ◽  
Investment Decision Making ◽  
And Performance

PurposeThis paper aims to show how overconfidence influences the decisions and performance of individual investors trading on the Pakistan Stock Exchange (PSX), with the mediating role of risk perception and moderating role of financial literacy.Design/methodology/approachThe deductive approach was used, as the research is based on the theoretical framework of behavioural finance. A questionnaire and cross-sectional design were employed for data collection from the sample of 183 individual investors trading on the PSX. Hypotheses were tested through correlation and regression analysis. The Baron and Kenny method was used to test the mediation effect of risk perception and the moderation effect of financial literacy. The results of mediation and moderation were also authenticated through the PROCESS and structural equation modelling (SEM) technique.FindingsThe results suggest that risk perception fully mediates the relationships between the overconfidence heuristic on the one hand, and investment decisions and performance on the other. At the same time, financial literacy appears to moderate these relationships. The results suggest that overconfidence can impair the quality of investment decisions and performance, while financial literacy and risk perception can improve their quality.Practical implicationsThe paper encourages investors to base decisions on their financial capability and experience levels and to avoid relying on heuristics or their sentiments when making investments. It provides awareness and understanding of heuristic biases in investment management, which could be very useful for decision makers and professionals in financial institutions, such as portfolio managers and traders in commercial banks, investment banks and mutual funds. This paper helps investors to select better investment tools and avoid repeating the expensive errors that occur due to heuristic biases. They can improve their performance by recognizing their biases and errors of judgment, to which we are all prone, resulting in better investment decisions and a more efficient market. The paper also highlights the importance on relying on professional knowledge, giving it greater weight than feelings and biases.Originality/valueThe current study is the first to focus on links between overconfidence, financial literacy, risk perception and individual investors' decisions and performance. This article enhanced the understanding of the role that heuristic-driven bias plays in the investment management, and more importantly, it went some way towards enhancing understanding of behavioural aspects and their influence on the investment decision-making and performance in an emerging market. It also adds to the literature in the area of behavioural finance specifically the role of heuristics in investment strategies; this field is in its initial stage, even in developed countries, while, in developing countries, little work has been done.

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