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1Dr. Anindita Chakraborty working as Assistant Professor, Institute of Management Studies, Banaras Hindu University, Varanasi, U.P., India. She can be reached at aninditachakraborty19@gmail.com
There is plenty of literature on how perceived risk affects the purchase intention of the consumers, but none is available in respect of investors. This research is an attempt to apply two consumer behaviour concepts in finance and conducts a study of investors’ psychology. The base theory of Cunningham (1967b) was used for understanding the concept of perceived risk and its facets. But for preparing the questionnaire, it was modified according to the requirement of investors’ buying behaviour. The study tries to examine the difference in the perceived risk of investors regarding three financial instruments, namely shares, mutual funds and bonds and is conducted in three cities, namely Allahabad, Lucknow and Varanasi with the help of a self-designed questionnaire. The results of the study showed a significant difference in the perceived risk of investors regarding the financial instruments. While in case of examining the impact of perceived risk on purchase intention of the three instruments, the results are connected to reality, that is the results were significant for shares and mutual funds but insignificant for bonds. The study will be useful to portfolio managers as it will help them in designing the investors’ portfolio by understanding their risk appetite.
Expected utility theory, Financial instruments, Perceived risk, Purchase intention, Risk perception
JEL Classification Codes: G10, G11, G23, G4, G41
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