Risk Perception, Risk Appetite, and Investment Behavior: Insights from Indian Equity Investors

DOI: https://doie.org/10.10399/ES.2025685672

Sankha Subhra Deb, Dr. Sujit Deb

Keywords:

Risk perception, Risk appetite, investment decision.

Abstract:

This study examines the impact of risk perception and risk appetite on investment decisions among investors in the Indian Stock Exchange. Data were collected from 316 active investors through structured questionnaires, utilizing a quantitative research approach and descriptive research design. Multiple regression analyses were employed to investigate the relationships between risk perception, risk appetite, and investment choices. The findings indicate that risk perception significantly influences investment decisions, with investors perceiving higher risks showing a tendency toward riskier investment assets. Additionally, risk appetite positively correlates with investment decisions, suggesting investors with higher risk tolerance are more inclined toward aggressive investment options. This research highlights the critical roles of psychological factors, specifically risk perception and risk appetite, in shaping investment behavior. Practical implications for investors, financial advisors, and policymakers include the importance of recognizing these psychological elements to enhance decision-making processes and reduce potential financial risks. Future studies are recommended to further explore these factors across different contexts to deepen the understanding of investment decision-making dynamics.

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