Risk Perception and Investment Behaviour among Women Investors: A Review of Literature

Abstract

Investment behaviour has traditionally been explained through rational financial models which assume that investors make decisions based on objective evaluation of risk and return. However, empirical evidence increasingly shows that financial decision-making is influenced by psychological and behavioural factors. Behavioral finance has therefore emerged as an important field that integrates psychology with financial economics to better understand how individuals make investment decisions. Among the various behavioural determinants, risk perception has been identified as a crucial factor affecting investors’ choices and participation in financial markets. Risk perception is the subjective interpretation of the uncertainty associated with investment decisions. Individuals often evaluate financial risks differently depending on their knowledge, experience, emotional disposition, and socio-economic background. This paper reviews the existing literature on risk perception and its influence on investment behaviour, with a particular focus on women investors. Studies indicate that women tend to perceive financial risks differently from men and often exhibit more cautious investment behaviour. Understanding these perceptions is essential for designing financial products and policies that encourage broader participation in financial markets. The review highlights key theoretical perspectives, empirical findings, and research gaps in the literature. The paper concludes by emphasizing the importance of financial literacy and behavioural awareness in shaping investment decisions among women investors.