Investor’s Intention to Invest in The Stock Market Amidst The Economic Crisis in Sri Lanka: Using an Extended Theory of Planned Behavior

Abstract

The primary objective of this research is to investigate the behavior of individual investors in the context of stock market investments during Sri Lanka's economic crisis. The study employs an extended version of the Theory of Planned Behavior (TPB) to comprehensively understand the factors influencing individual investor decisions. Utilizing a quantitative approach, the research aims to determine the better prediction of this expanded TPB in predicting individual investor behavior amid economic challenges. Data was collected through a systematic self-administered questionnaire distributed to both existing and potential individual investors. The relationship between variables was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results demonstrated that, amid the economic crisis, the subjective norms towards investing had the largest impact on individuals' intentions to participate in the stock market and Risk avoidance and Uncertainty avoidance had a highly significant influence on investor’s intentions. This research examined only current and prospective Colombo stock market investors' investment intentions during Sri Lanka's economic crisis. Few studies have attempted to include risk avoidance and uncertainty avoidance within a decision-making framework and future studies focus on these diverse market contexts. Owing to the economic downturn in Sri Lanka, the augmented TPB put forth in this study has contributed valuable insights for financial professionals, regulators, as well as existing and prospective investors. It furnishes a substantial knowledge base to aid in making informed investment decisions. Furthermore, it offers an expanded comprehension to existing and potential investors about the intricacies of the relationship between investment intentions, thereby widening their perspective.