Indian individual investor behaviour: a model based study to meet sustainable and inclusive growth

Abstract

This study investigates the contextual and psychological factors influencing individual investor's decision making in the currently volatile and emerging Indian investment market. Primary information was collected through a multi-segment questionnaire. Responses were obtained from 384 individuals and a model was thus developed using exploratory factor analysis and structural equation modelling to show the impact of psychological factors and contextual factors on financial satisfaction. On the basis of exploratory factor analysis six relatively homogenous groups of contextual factors that influence individual investor behaviour were identified. SEM analysis depicted that psychological factors/biases and contextual factors could explain 13% of variation in financial satisfaction. This paper can act as a guide to the investors, financial service providers, government and the policy makers. This analysis also contributes to the literature of behavioural research, in terms of generating financial satisfaction through behavioural, psychological and contextual factors.