Stock market returns causing to move away from traditionally safe assets: Study
mutual funds according to a research paper by RBI economists. But it is slowly influencing the savers to move away from traditional safe instruments like fixed deposits and post office savings schemes.
“Stock market returns have a statistically insignificant relationship with the investment decisions in equity and mutual funds,” said a research paper titled 'Determinants of Household Saving Portfolio in India: Evidence from Survey Data' by Chaitali Bhowmick, Sapna Goel, Amit Kumar, Rekha Misra, Preetika and Satyananda Sahoo. The views expressed in this article are those of the authors and do not represent views of the Reserve Bank of India.
The returns in the stock market, represented by BSE Sensex returns, do not exhibit any statistically significant relationship with assets like shares and mutual fund investment, the authors note. “Extant literature posits that the relationship between stock market return and stock market investment is not straightforward.”
But at the same time, BSE returns, however, significantly induce investments away from safe and traditional instruments like fixed deposits and post office savings instruments in urban areas, highlighting that some substitution may be underway, the authors say.
Interest rate on term deposits positively influences saving decision in assets like fixed deposits and post office savings while house prices have a mixed impact across rural and urban areas on savings in financial assets.
Stock Trading
Masterclass on Value Investing and Company Valuation
By — The
