A STUDY ON BEHAVIOURAL AND ECONOMIC FACTORS INFLUENCING INVESTORS’ DECISIONS TO INVEST IN MUTUAL FUNDS IN BANGALORE DISTRICT

Abstract

Mutual funds have emerged as an important investment avenue in India by enabling individual investors to participate in diversified portfolios managed by professional fund managers. Investors’ decisions to invest in mutual funds are influenced not only by expected returns and prevailing economic conditions but also by behavioural characteristics, perceptions, experiences and financial attitudes. The present study, titled “A Study on Behavioural and Economic Factors Influencing Investors to Invest in Mutual Funds in Bangalore District,” examines the influence of behavioural and economic factors on investors’ decisions to invest in mutual funds. The study adopts a descriptive and analytical research design and is based primarily on primary data collected from 400 respondents through a structured questionnaire using a five-point Likert scale. The study considers twelve behavioural factors and twelve economic factors and applies descriptive statistics, correlation analysis and multiple regression analysis. The behavioural regression model demonstrates a very strong relationship between behavioural factors and investment decisions, with R = 0.984 and R² = 0.968, while the overall model is statistically significant (F = 981.892, p < 0.001). The economic-factor model also shows a strong relationship, with R = 0.854 and R² = 0.730, and is statistically significant (F = 87.123, p < 0.001). The findings indicate that risk perception, previous investment experience, financial-planning attitude, social influence and mutual fund awareness are significant behavioural considerations. Among economic factors, interest rates, liquidity, regular income and earning capacity, tax advantages, purchasing power and broader economic conditions demonstrate significant relationships with investment decisions. The study concludes that mutual fund investment decisions are multidimensional and are shaped by the interaction of behavioural and economic considerations. The findings may be useful to mutual fund companies, financial advisors, investors, policymakers and researchers in understanding investor decision-making and developing appropriate investor-awareness and financial-education initiatives.