Understanding the Impact of Investor Behaviour and Risk Tolerance on SIP Adoption: A Behavioural Finance Perspective

Abstract

This study investigates the behavioural determinants of Systematic Investment Plan (SIP) adoption, focusing on the roles of investor behaviour and risk tolerance. Drawing from a sample of 241 respondents, the research applies a structural equation modelling (SEM) approach to assess the direct and moderating effects of risk tolerance on the relationship between investor behaviour and SIP adoption. The findings reveal that both investor behaviour and risk tolerance significantly and positively influence SIP adoption. Moreover, risk tolerance moderates the relationship, intensifying the positive effects of disciplined investment behaviour on SIP engagement. These insights contribute to behavioural finance literature and offer practical implications for investment advisors and financial institutions aiming to improve investor engagement and retention through personalized strategies.