What Explains Millennials’ Intention to Invest in the Stock Market? An Extension to the Theory of Planned Behavior

Abstract

The study intends to determine the factors that influence millennial investors’ attitudes and behavioral intention to invest in the stock market in a developing nation. We extended the “Theory of Planned Behavior” (TPB) by including two motivating factors, namely, financial knowledge and parental influence, and one inhibiting factor, hassle, to measure intention of millennial investors in India. The study used cross-sectional and quantitative approaches using a questionnaire-based survey process to collect the responses of 196 millennials. We used PLS-SEM to determine the proposed relationship between constructs. We also created the importance-performance matrix to further refine the results. The study found TPB variables to be most significant in influencing behavioral intention. In addition, parents’ influence was found positively impactful on financial self-efficacy, which leads to high behavioral intention. The study contributes by identifying different elements in order to enhance education and awareness related to financial products, risk and return, and types of investments that can increase millennials’ intention to invest in the long term.

TOPICS: Wealth management, emerging markets, quantitative methods, statistical methods, legal/regulatory/public policy

Key Findings

• ▪ Theory of Planned Behavior explains millennial investors’ intention to invest in the stock market.

• ▪ In a developing country like India, parents’ influence positively impacts investor’s financial self-efficacy and intention to invest.

• ▪ Financial knowledge enhances the financial attitude and reduces the hassle factor for millennial investors’.