Confidence, Risk Tolerance, and the Dual Role of Peer Influence in the Investment Decisions of Employed Women: A Structural Equation Model from Urban India

Abstract

Although employed women represent one of the fastest-growing segments of the investor population in emerging economies, their investment decision-making is still largely modelled through fragmented, single-determinant frameworks that treat women as a homogeneous group. This study develops and tests an integrated structural model of financial-goal-directed investment orientation among employed women, drawing together Behavioural Finance Theory, the Theory of Planned Behaviour, and the Life-Cycle Hypothesis. Primary data were collected through a structured questionnaire from 951 employed women across the four administrative zones of Bengaluru, India, using stratified random sampling. The measurement model was validated through exploratory and confirmatory factor analysis, and four competing structural specifications were estimated by maximum likelihood; the best-fitting model was selected on the basis of the corrected Akaike Information Criterion and approximate fit indices. The results indicate that risk tolerance is the strongest direct correlate of financial-goal-directed investment orientation, that confidence and self-efficacy operates as the pivotal psychological mediator linking macroeconomic perception to risk-taking, and that market sentiments are the strongest external correlate of investor confidence. Peer influence shows a theoretically important dual association, positively related to risk tolerance while negatively related to confidence. A serial mediation pathway running from market sentiments through confidence and risk tolerance to financial goals is supported. Because the design is cross-sectional, the associations are interpreted as structural relationships consistent with the proposed theoretical framework rather than as established causal effects. This study is exploratory and hypothesis-generating in character. The findings reframe financial-inclusion interventions for employed women around confidence-building rather than information provision, with implications for product design, advisory practice, and policy.