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CHAPTER-2

REVIEW OF LITERATURE
The published work relating to the topic is reviewed by the Researcher. The Relevant
literature is reviewed on the basis of Books, Periodicals, and News Papers and Websites.
The detailed review is given below.

Chalam G. V. (2003) stated that off all the sections of the society, the household group
contributes much of the capital, forming the lifeblood for the economy. According to his
analysis, the mutual fund business in India is still in its embryonic form as they currently
account for only 15 % of the market capitalization. The success of mutual funds business
largely depends on the product innovation, marketing, customer service, fund
management and committed manpower. The investment pattern of the investors reveals
that a majority of the investors prefer real estate investments followed by mutual fund
schemes, gold and other precious metals.
Dr. Virani (2005) investigated that the major impact on savings is due to the level of
income of the salaried person. The research shows that majority of the respondents are
saving money as Bank deposits for the safety of an unpredictable future. The main
avenues of investment are Bank deposits and the main purpose of investment is for
children education, marriage, and security after retirement.
.
Jain and Jain (2005) examined the study concluded that in todays world money play
vital role in ones life and that the importance of money has been started being
recognized by the salaried person. They know the importance of money so they are
initiated themselves to prepare the budget and lessen down their expenses to meet the
future consequences. It has been evident from the study that most of the school teachers
are saving their money for the purpose of their childrens education, marriage and as
security after retirement.
Pandiyan and Aranganathan (2006) focused on the factor that influences savings and
investment behavior of the salaried class in the study area. The reveal find out that

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Majority of the salaried class save money for their childrens education, emergency need
and future life. It is found that current holding of investment in bank deposit, house
property, insurance, bullion and provident fund is more among salaried class people.
Salaried class investor holds their investment in insurance and chit fund for the purpose
of their daughters / sons marriage.
Singh J. and S. Chander (2006) published in The ICFAI Journal of Behavioral Finance,
2006. Pointed out that since interest rates on investments like public provident fund,
national saving certificate, bank deposits, etc. are falling, the question to be answered is:
What investment alternative should a small investor adopt? Direct investment in capital
market is an expensive proposal, and keeping money in saving schemes is not advisable.
One of the alternatives is to invest in capital market through mutual funds. This help the
investor avoid the risks involved in direct investment. Considering the state of mind of
the general investor, this article figured out the preference attached to different
investment avenues by the investors. The preference of mutual funds schemes over others
for investment. The source from which the investor gets information about mutual funds
and the experience with regard to returns from mutual funds. The results showed that the
investors considered gold to be the most preferred form of investment, followed by NSC
and post office schemes majority of the investors based their investment decision on the
advice of brokers, professionals and financial advisors. The findings also revealed the
varied experience of respondents regarding the returns received from investments made
in mutual funds.
Mittal M. and A. Dhade (2007) published in The ICFAI Journal of Behavioral Finance,
2007, Observed that risk-taking involves the selection of options that might result in
negative outcomes. While present is certain, future is uncertain. Hence, all investment
involves risk. Decorum (2007) indicated that the process of making investment decisions
is based on the behavioral economies theory which uses the fundamental aspects of the
Prospect Theory developed by Kahneman and Tversky (1979).
Mittal M. and R. K. Vyas (2008) observed that investors have certain cognitive and
emotional weaknesses which come in the way of their investment decisions. According to

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them, over the past few years, behavioral finance researchers have scientifically shown
that investors do not always act rationally. They have behavioral biases that lead to
systematic errors in the way they process information for investment decision. Many
researchers have tried to classify the investors on the basis of their relative risk taking
capacity and the type of investment they make. Empirical evidence also suggests that
factors such as age, income, education and marital status affect an individuals investment
decision.
Bhusha and Medury (2008) studied that in the past, traditional financial products were
offered in India by banks (deposit account, credit account), Life Insurance Corporation
(LIC), and postal department (recurring deposit, National Saving Certificate, Kisan Vikas
Patra). However, in recent years with the advent of liberalization of financial services
industry, diverse financial products have been introduced such as mutual funds, shares,
derivatives, life and non-life insurance schemes (Unit Linked Investment Plans (ULIPs),
pension plans, children education plans, etc.). Investment preference differs from person
to person, as every individual behaves differently while investing. Investment behaviour
of an individual is guided by his own set of circumstances. With an expectation of
generating high returns over a period of time and certain levels of risk, individuals invest
in different financial products.
Nandanwar (2008) has studied the published work. The individual investors buying
behavior is influenced by various factors such as social, economic, psychological and
demographic. Individual investors investments are backed by benefits and money.
Individual investor still prefers to invest in financial products which give risk free returns.
The study also confirmed that Indian investors even if they are of high income, welleducated, salaried, and independent are conservative investors who prefer to play safe in
the market.
Umamaheswari and Kumar (2008) the financial facet of the world at all times exhibits
an uncanny proportionate impact of the public investment choices, their awareness about
the investment needs, their expectation of returns on their investments etc. Perhaps,
predicting the progress of the commercial world would be indispensable without an

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appropriate comprehension of the investment policies of the prime part of the society
called salaried middle class. Pondering on this perspective has routed into this empirical
study on juxtaposing the investment awareness of the salaried middle class along with
that of their anticipation on their investment returns. This paper intends to serve a bridge
to the need of a holistic comprehension of the financial aspirations of the salaried middle
class investors with that of their ambitious longing for the percentage of investment
returns.
Nasir and Khalid (2009) assessed behavior of saving and investment in Pakistan using
appropriate econometric and statistical technique and attempted to generate a model on
the basis of fundamental theories of saving and investment. They used data from 1971 to
2003, collected from Economic Survey of Pakistan. Ordinary Least Square Method was
used as an estimation technique. The study concluded that Government Expenditures,
Growth rate of Gross Domestic Product and Remittances Growth were positively and
significantly influencing National Savings. Lewis A Sanders (2004) believes that people,
irrespective of their location, have their own bias and react differently when investing in
financial assets.
Patil and Nandanwar, (2009) has studied the published work. The individual investors
buying behavior is influenced by various factors such as social, economic, psychological
and demographic. Individual investors investments are backed by benefits and money.
Individual investor still prefers to invest in financial products which give risk free returns.
The study also confirmed that Indian investors even if they are of high income, welleducated, salaried, and independent are conservative investors who prefer to play safe in
the market. Financial regulators have to organize seminars, programs and sessions for
creating awareness in individual investors as well as to boost confidence level among
them.
R. Kasilingam and G. Jayabal (2009) stated that if the savings of the individuals are not
channelized in a proper manner, then it may find its way into unproductive channels such
as investment in gold or it may lead to unscrupulous rise in the consumption pattern, both
of which are not good for the economy. It is a known fact that post office savings

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schemes are attractive tax saving investment schemes to the salaried class investors. It is
also a suitable investment option to the small and medium investors because it satisfies
all the criteria required by Indian investors. The fund invested in small savings schemes
will yield good results not only individual investors but also to the nation. Small savings
schemes are designed to provide safe & attractive option to the public and at the same
time to mobilize resources for development of the nation. As the government is giving
attractive return mainly to the small investors the institutions and NRIs are prohibited
from investing in small saving schemes. During recession small savings will be an ideal
alternative investment because it produces stable and risk free return. Wledge and
experiences and their involvement with their wealth management. Wealth advisors are
also urged to consider helping their clients manage their wealth by being aware of
gender-predicted differences in client situations.
Tversky and Nerman (2010) stated that the investors become more risk averse when
making profits and more risk taking when making a loss. Rober J Shiller (1989) stated
that the attitude changes among the investors with two basic attitudes are explored:
bubble expectations and investors confidence. They concluded that the investors
confidence has remained vary flat.
S. Saravana Kumar (2010) stated that the most of the investor are aware of high risk
involved in the derivative market. To reduce the risk in the market, the investors should
strictly follow the stop loss method. The study reveals that most of the investor prefers
cash market where the script can be held for long term and the risk is less and it is
transferable to others with minimal time period. Even though risk is higher, some
investors prefer derivative market where return is also higher. The investors are suggested
that before going for investment proper study about the script is essential. The study has
highlighted a few suggestions for removing constrain in the crucial variables which
directly affect the investor and company. The investors are highly satisfied with equity
shares because of many reasons, i.e., liquidity, low investment, capital appreciation etc.
development, New Delhi. Pointed out that too much volatility, too much price
manipulation, unfair practices of brokers and corporate mismanagement and frauds as
the main worries of investors.

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Yoo (2011) said that the diminishing of risky assets over an individuals lifetime is not
uniform and individuals appeared to increase their investment in risky assets throughout
their working lifetime and decrease their risk exposure once they retire. He also used
regressions and found that age was a significant factor in determining the portfolio
composition.
Warren and ET. al. (2013) used lifestyle characteristics to differentiate investors by the
size and the nature of their investment holdings. He found that the failure to use lifestyle
characteristics for further egmentation blurs some real differences between individual
investors and their financial service needs.
Karthikeyan (2013) conducted research on small investors perception on post office
saving schemes and found that there was significant difference among the four age
groups, in the level of awareness for kisan vikas patra (KVP), National Savings Scheme
(NSS), and deposit Scheme for Retired Employees (DSRE), and the Overall Score
Confirmed that the level of awareness among investors in the old age group was higher
than in those of young age group. NO differences were observed among male and female
investors except for NSS and KVP.
Krishnamoorthy.C. (2014) has analyzed the profile and awareness of salaried class
investors and their attitude and satisfaction towards investment. In has been concluded
that all salaried people were aware of bank deposits, PF schemes, insurance schemes,
post office savings schemes, gold and however only few were aware 0f UTI
Syed Tabassum Sultana (2015) found that there is a strong negative correlation between
Age and Risk tolerance level of the investor. Television is the media which is largely
influencing the investors decisions to design products which can cater to the investors
who are low risk tolerant.
Ranganathan K. (2015) noted that financial markets are affected by the financial
behavior of investors. She observed that consumer behavior from the marketing world
and financial economics had brought together a need to study an exciting area of

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behavioral finance. This study was an attempt to examine the related aspects of the fund
selection behavior of individual investors towards mutual funds in the city of Mumbai

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