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Quantifying Risk in Investment Decision-Making

Author

Listed:
  • 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)

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.

Suggested Citation

  • Jaheera Thasleema Abdul Lathief & Sunitha Chelliah Kumaravel & Regina Velnadar & Ravi Varma Vijayan & Satyanarayana Parayitam, 2024. "Quantifying Risk in Investment Decision-Making," JRFM, MDPI, vol. 17(2), pages 1-20, February.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:2:p:82-:d:1340973
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    References listed on IDEAS

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    5. Zeeshan Ahmed & Shahid Rasool & Qasim Saleem & Mubashir Ali Khan & Shamsa Kanwal, 2022. "Mediating Role of Risk Perception Between Behavioral Biases and Investor’s Investment Decisions," SAGE Open, , vol. 12(2), pages 21582440221, May.
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    Cited by:

    1. Jacob Odei Addo & Juraj Cúg & Solomon Abekah Keelson & John Amoah & Zora Petráková, 2025. "Behavioral Risk Management in Investment Strategies: Analyzing Investor Psychology," IJFS, MDPI, vol. 13(2), pages 1-19, April.
    2. Harshita Srivastava & Sana Moid & Naela Jamal Rushdi, 2025. "Risk Tolerance and Stock Market Investment Decisions: A Bibliometric Analysis," Metamorphosis: A Journal of Management Research, , vol. 24(2), pages 202-213, December.
    3. Safi Ullah & Deng Xiaopeng & Diana R. Anbar & Chiemela Victor Amaechi & Muhammad Waqas Ashraf, 2025. "Political Risk Management in International Construction: Evidence from Pakistan," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 26(4), pages 839-864, December.
    4. Sergey Yekimov, 2024. "Using Fermat-Torricelli points in assessing investment risks," Papers 2408.09267, arXiv.org.

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