Journal of Finance and Bank Management

Influence of Risk Perception of Investors on Investment Decisions: An Empirical Analysis
Dr. Sindhu K. P, Dr. S. Rajitha Kumar

Abstract
Risk is an inherent feature of all types of financial investments due to the variability in the actual and expected returns on investment. The concept ‘risk perception’ means the way in which investors view the risk of financial assets, based on their concerns and experience. The risk perception of investors is an important factor that influences the investment decisions. Hence, in the present study, based on the review of literature and discussions with experts in the field a number of factors influencing the risk perception of investors were identified. These factors include unpredictability of returns, knowledge about the financial assets, chance for incurring loss, diversification of portfolios, and dependence on professional investment advice. The investors were provided with nine statements relating to risk, to measure their perception towards risk. In the present paper, the relation between risk perception of the investors in the Kerala State and their investment decisions in mutual funds is analysed.

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