INVESTOR CHARACTERISTICS AND THEIR EFFECT ON INVESTMENT DECISIONS AMONG PUBLIC UNIVERSITY WORKERS IN KENYA

Abstract

Investment decision has become part of individuals’ lives in recent days. People invest in insurance policies, fixed deposits, shares, equities, real estate, mutual funds, and government securities among others. Universities are the peak of knowledge hence the community expects that workers in such institutions be on the frontline in making informed investment decisions. Although university staff work in the same environment, different investor characteristics affect their investment decisions differently. However, there is limited information on the moderating effect of mobile borrowing on the relationship between investors’ risk attitude, demographic profile, and socio-economic status on investment decisions. This study investigated investor characteristics and their effect on investment decisions among public university workers in Kenya. The objectives of the study were to; assess the effect of investor risk attitude on investment decisions among public university workers in Kenya, test the effect of the investor demographic profile on investment decisions among public university workers in Kenya, and determine the effect of socio-economic status on investment decision among public university workers in Kenya. The study also examined the moderating effect of mobile borrowing on the effect of investor risk attitude and socio-economic status on investment decisions among public university workers in Kenya. Capital Asset Pricing Model, Efficient Markets Hypothesis, Prospect Theory and Behavioural Finance Theory guided the study. The study adopted a descriptive survey research design with a target population of 2069 workers from the sampled Public Universities in Kenya. A stratified random sampling technique was employed from which a sample of 335 was used. Further, data was collected using a structured questionnaire. The questionnaires were administered using google forms. Data was analysed using regression analysis with the aid of SPSS version 26 software, and Microsoft excel. Charts, tables, graphs, and figures were used to present the results. The results of the study indicated that risk attitude had the biggest effect on investment decision-making since it explained 41.7 percent while socio-economic status explained only 27.5 percent variation in investment decision making. Compared with other variables, risk attitude had the highest effect on investment decisions as it led to 0.630 units rise in investment decisions for every unit change. In addition, all the demographic factors influenced the choice of investment. However, gender, age and marital status had a negative effect on investment decision making. The results also showed that investors between the age of 31-40 were willing to diversify their investments, unlike the other age groups. Mobile borrowing was found to moderate the relationship between investment decisions and its predictors. The study concluded that risk attitude was the leading predictor of investment decisions. Since workers between 31-40 years were found to have a much higher affinity for risk and investment, the study recommends that the government consider targeting civil servants and other professionals in this age group by providing them with investment incentives. Further, a similar study could be conducted to assess how mobile borrowing will moderate investment decision-making once the government operationalizes the new law governing mobile lending in the country. The findings of this research are significant in that they will benefit lenders in understanding how various categories of borrowers behave in the investment of the borrowed funds. This will lead to economic growth as most credit facilities will be granted to those likely to invest.