Antecedents of Households’ Investment Decision-Making Process:A Study of the Indian Households

Current Investment Decision Making (IDM) models present numerous variables that influence investment choice, and thereby, providing a theory base for how investment decisions are made by investors. The study reported here investigated the underlying dimensions in the selection of different investment avenues for the households. An examination of a sample of 500 investor respondents led to unraveling the difference in the household’ IDM process both present and future with regard to varied investment alternatives. The results of factor analysis revealed emphasis on familiarity, satisfaction, opinion and demographic dimensions for all investment avenues. Univariate analyses of mean and proportion showed a significant difference amongst households with respect to their decision to invest vis-à-vis abstain in a particular investment avenue on the satisfaction dimension with regard to present investment and the opinion dimension with regard to future investments. The analyses are relevant since they reiterate the fact that the holistic development of capital market can take place only if a concerted effort is made to educate the household investors. The paper also provides direction for future research by identifying a number of issues and areas that have remained totally unexplored in the context of household investment participation and diversification in India.