Psychosocial Determinants and Investment Behavioural Dynamics Among Salaried Investors

Introduction Investment behaviour among salaried individuals in Tamil Nadu is shaped by a range of psychosocial determinants. This study explores how psychological factors such as risk tolerance, cognitive biases, and emotional responses interact with social influences like peer pressure, cultural norms, and socioeconomic status to influence investment decisions. Understanding these dynamics is crucial as they contribute to both optimal and suboptimal investment behaviours among salaried investors in urban areas. Methods The study employs a quantitative research design with a stratified simple random sampling technique. Primary data were collected from 576 participants, divided into individual and corporate investors, across Tamil Nadu's 38 districts. Data collection utilized a structured questionnaire, and analysis was performed using factor analysis, Z-tests, and regression analysis. Exploratory Factor Analysis identified four key factors affecting investment behaviour: Investor-Related Factors, Market/Environment-Related Factors, Investment Related Factors, and Company-Specific Characteristics. Results Factor analysis revealed that Investor-Related Factors, Market/Environment-Related Factors, Investment-Related Factors, and Company-Specific Characteristics account for significant variance in investment behaviour. The Z-tests indicated notable differences between individual and corporate investors in terms of these factors. Regression analysis showed that psychological determinants like cognitive biases and emotional responses significantly impact investment decisions. Conclusion The study highlights that psychosocial determinants play a crucial role in shaping the investment behaviour of salaried individuals in Tamil Nadu. Financial advisors and policymakers need to consider these factors to develop tailored strategies that address cognitive biases and enhance financial decision-making. Improved financial education and advisory services can help mitigate suboptimal investment behaviours and foster better financial outcomes. Originality This research provides a comprehensive analysis of the psychosocial factors influencing investment behaviour among salaried investors in Tamil Nadu. By integrating psychological and social determinants and employing robust statistical methods, the study offers new insights into the investment dynamics in a specific regional context. This contributes to the broader literature on Behavioural finance and informs better financial planning and advisory practices.