Mediating Role of Locus of Control on Factors Influencing Investment Decisions in Chennai
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Asst Professor, Gurunanak College, Chennai
Publication date: 2019-03-16
Eurasian J Anal Chem 2018;13(Engineering and Science SP):emEJAC181205
The stock market in any country becomes the yardstick for the measure of economic strength and development of the country. It is a place where the purchase and sale of shares take place. Since it is the source of financing investments of business organizations, the movements of the stock market or the trend as what it is called, can help determine the economic health of the country in which the rise of the share price is considered to be healthy and a fall in the prices vice versa. Pakistan, the emerging market, was ranked the best performing market in the whole of Asia in 2016 according to Bloomberg, and it is ranked as the fifth best market with regard to its market performance globally. Investors around the world today are looking for stock markets that are less effected by the interest rate cycles in the U.S. and the economic slowdown in China and Pakistan proves to be a great opportunity for such investors in future ventures. It is important to study the behaviour of investors operating in the Pakistan Stock Market to understand the factors that influence their investment behaviour. This study has been mitigated to identify the relationships between the representative bias and availability bias and the overall influence of representative as well as the availability bias on the investment decision making by the investors. The role of locus of control as mediator in this model has been explored. The structural equation modelling technique was adopted to test overall model fit and the mediating effect of locus of control. This study investigates the role of locus of control on relationships between representative bias and investment decisions, Availability bias and investment decisions. This study empirically approached the investors’ decision making power in terms of their locus of control. The result does not support completely the locus of control plays a role in investors decision making but it also not completely eliminate the role of investors’ decision making with respect to locus of control. It is concluded that the more focused studies on the internal behaviour of investors may fetch many attributes that would foster the investment venues.