Abstract
It is eminent to understand, be aware of and encourage domestic retail investors towards investment in the capital market in a developing economy such as India for tackling the situation of capital insufficiency and financial instability. Therefore, the study was purposed to find out the different dimensions of cognition that affect investment attitude and the different characteristics of risk absorption affecting the investment decision making. The study also intended to find the direct and the mediating impact of investors’ cognition directly and through risk-absorption scenarios on the level of interest on investment. The study used the causative research design and by using stratified random sampling, received 392 responses from investors with risk-absorption characteristics from four strata of Odisha (a state of India) through a self-constructed questionnaire. Factor analysis was used to find out the factor of cognition and risk absorption. Multiple linear regression was used to find out the effect of both factors of cognition and risk absorption on the intensity of purchase financial product or level of interest in investment. Mediation analysis was used to find the mediating impact showing the direct and indirect impact of cognition on interest in investment and through the factors risk absorption. The study found that the dimensions of cognition (hot, cold, social and meta) have a significant impact on the level of interest towards investment, so financial product sellers must use these dimensions and sources of cognition to bring up interest from the domestic investor to invest in the domestic capital market. It has also been found that the risk-absorption characteristics play a mediating and vital role in the relation between investors’ cognition and level of interest in investment. Therefore, it is imperative to uplift the risk-absorption capacity through different dimensions of cognition and sources of information, which can reflect in a better understanding of the market and investment scenarios.
Highlights
Many developing nations such as India, Brazil, Argentina, Indonesia and many south east Asian countries are vulnerable to external economic crisis due to over dependency on foreign soil for their capital need (De 2020)
The study elaborated different ways of mental processing, which can be used by the financial product marketer to understand and provide relevant information as per the investors’ mental processing capabilities, so they can form an intent to invest in the domestic capital market through their sense of information processing
Failure in the past investment and domestic economic crisis because of foreign economic break down has scared the domestic investors away frominvesting in the capital market
Summary
Many developing nations such as India, Brazil, Argentina, Indonesia and many south east Asian countries are vulnerable to external economic crisis due to over dependency on foreign soil for their capital need (De 2020). It has been seen that, when the major economies in the world trembles, the nations depending on the major economies start shattering. The world crisis has affected the major developing nations and its growing economy. Due to openness in the economy, India’s economy is susceptible to world economic crises. The. Latin American debt crisis in 2002, the great depression in 2007 and the European crisis in 2010 have shown the devastating impact of world crises on the Indian economy. The world has seen many financial crises arising out of pandemicsandepidemics such as SARS, swine flu, H1N1 virus, COVID-19, etc.
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