Do Awareness, Risk Perception, and Past Experience Influence Equity Investments? A Case Study on India

Abstract

The purpose of this paper is to examine whether investor's awareness, risk perception, and prior investment experience have any effect on the equity investment. The study is based on primary data collected using multistage random sampling method. We apply binomial logistic regression for analysis and observe that both awareness and past experience influence equity investments. We, however, also observe that risk perception plays no role in equity investments. We propose that appropriate policy measures can enhance the awareness level and experience of the investors regarding equity investment. To increase the individual investors' participation in the equity market, in the context of India, we propose that regulators and policy makers focus on making people experienced in this field. Government should nudge individuals by incentivizing equity market investment to increase market participation. Employers can also impart investment education to the employees to make them aware about equity investment and consequently increase equity investment.