Quantifying Risk in Investment Decision-Making

Jaheera Thasleema Abdul Lathief, Sunitha Chelliah Kumaravel, Regina Velnadar, Ravi Varma Vijayan and Satyanarayana Parayitam ()
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Jaheera Thasleema Abdul Lathief: Department of Commerce Holy Cross College, Manonmaniam Sundaranar University, Tirunelveli 629002, Tamil Nadu, India
Sunitha Chelliah Kumaravel: Department of Commerce Holy Cross College, Manonmaniam Sundaranar University, Tirunelveli 629002, Tamil Nadu, India
Regina Velnadar: Department of Commerce Holy Cross College, Manonmaniam Sundaranar University, Tirunelveli 629002, Tamil Nadu, India
Ravi Varma Vijayan: Government Arts and Science College, Bharathiar University, Coimbatore 641109, Tamil Nadu, India
Satyanarayana Parayitam: Department of Management and Marketing, Charlton College of Business, University of Massachusetts Dartmouth, Dartmouth, MA 02745, USA

JRFM, 2024, vol. 17, issue 2, 1-20

Abstract: In the wake of inflation, investors engage in identifying inflation hedging instruments. Most importantly, investors attempt to minimize risk and maximize returns to safeguard against inflation. Risk plays an important role in this process. The objective of this research is to examine the relationship between risk factors and investor behavior, particularly in the Indian context. Based on the theory of planned behavior (TPB), we built a conceptual model investigating the intricate relationship between risk factors, investment priority, investment strategy and investment decision-making. We collected data from 537 respondents in the southern region of India and analyzed the data using Partial Least Squares Structural Equation Modeling (PLS-SEM). The result indicate: (i) risk factors (risk capacity, risk tolerance, and risk propensity) are positively related to investment priority and investment strategy, (ii) investment priority is positively related to investment decision-making, (iii) conscientiousness moderates the relationship between investment priority and investment decision-making, (iv) investment strategy is positively related to investment decision-making. Finally, the practical and theoretical implications for research are discussed.

Keywords: risk capacity; risk tolerance; risk propensity; investment priority; conscientiousness; investment strategy; hierarchical regression; process macros (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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