Discretionary Savings and Investment Behaviour of Middle Class Households in India: Empirical Evidence

Abstract

The study is indented to understand the relationship between the saving and investment behavior among middle class households. Secondly, dependency of discretionary savings and investment behavior on select control variables of middle class households also been assessed. The study captured descriptive research approach based on 200 respondents (100 Male & 100 Female) of different age groups, educational qualifications, belonging to joint or nuclear family types, differentiated on the basis of income & employment. The questionnaire used 14 statements of saving and investment behavior adopted from Bhushan (2014) and Lusardi (2008) which measures the response on 5-Point Likert Scale. Two different important statistics namely Pearson Correlation Matrix and Two- Way ANOVA have been used in accordance with the needs of the data set and specified objectives. Pearson correlation technique defines that a total of 91 combinations of variables, around 39 are found to be highly significant (p<.01). Twelve (12) of them were found significant at 0.05 level (p<.05) and remaining 40 are found to be insignificant (p>.05). Very few cases strong positive correlation can be seen in between indicators of discretionary savings and investment behavior. Saving behavior is not dependent on type of employment (main effect) and monthly income (main effect) is found statistically insignificant at 5% level of significance, whereas in case of investment behavior (Dependent Variable), only monthly income shows statistically significant. Interaction effects in both the case found statistically insignificant. This paper examined into the understanding of savings and investment behavior of middle class households which can be of great relevance to the policy makers and the government to anticipate and formulate strategies to respond the varying saving and investment behavior of the middle class investors.

Keywords: Savings and Investment Behaviour, Middle Class Households, Banking Service, Indian Economy, and Financial Literacy

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