Socially responsible investment behavior: a study of individual investors from India
ISSN: 1940-5979
Article publication date: 14 July 2022
Issue publication date: 8 November 2023
Abstract
Purpose
Socially responsible investment (SRI) is a niche and upcoming investment strategy in India. Very few researches have been conducted on SRI in the Indian context. This study identifies the SRI awareness level, attitude towards the importance of environmental, social, and governance (ESG) issues, willingness to invest in SRI avenues and obstacles in SRI investment decision-making by Indian retail investors. The second objective was among the awareness, attitude, willingness, obstacle, and demographic constructs to identify the most significant variables that impact an individual investor's SRI decision in India. .
Design/methodology/approach
Data for the study have been collected through a self-structured questionnaire. Descriptive statistics are used to identify the importance of variables for individual investors. This paper used the theory of planned behavior (TPB) to understand the factors impacting individual investors' SRI behavior. Binary logistics regression analysis is used to recognize the variables that affect an individual investor's SRI decision.
Findings
The descriptive statistics indicate a low level of SRI awareness; the majority of the investors agreed that ESG issues are significant in investing and showed a willingness to invest in SRI avenues. However, the investors were not willing to accept lower returns from SRI. The majority of investors found, lower returns on SRIs, no tax benefit, lack of information about SRIs, and low liquidity as important obstacles in SRI investing. Binary logistics regression results indicated that awareness about SR/ESG indices, awareness about SR/ESG funds, and willingness to invest in SRI avenues significantly impact investors' SRI decisions but demographic variables have no significant impact on SRI decision-making.
Practical implications
This study has implications for the ethical/SR mutual funds managers, policymakers, government, and international asset management companies. The study finds an urgent need for increasing awareness about SRI among individual investors in India. The study suggests that the issuers must provide adequate information about SRI avenues and probable risk and returns involved in these, while the regulators must make efforts to educate investors in India.
Originality/value
The context of the present study is original because hardly any of the earlier studies conducted in India have tried to find out the individual investors' SRI awareness level, investors' willingness towards SRI, investors' attitude towards ESG issues, and obstacles faced by investors in socially responsible investing.
Keywords
Acknowledgements
Informed consent: A statement of confidentiality was given as an opening paragraph in the questionnaire to obtain informed consent from all responding individuals in the study.
Ethical approval: This study is not an experimental study. Hence does not involve human participants for any biological materials and does not involve any animal participants.
Conflict of interest: The authors declare that they have no conflicts of interest relevant to the content of the submitted article.
Citation
Jonwall, R., Gupta, S. and Pahuja, S. (2023), "Socially responsible investment behavior: a study of individual investors from India", Review of Behavioral Finance, Vol. 15 No. 6, pp. 865-888. https://doi.org/10.1108/RBF-05-2021-0099
Publisher
:Emerald Publishing Limited
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