Predicting investors’ intention to invest in the stock market during COVID-19: can we use an extended theory of planned behavior?

This study aims to explain investors’ intention to invest in the stock market amid the COVID-19 pandemic by expanding the Theory of Planned Behavior (TPB).

This study adopts a quantitative approach, and a questionnaire-based survey was conducted to collect responses from existing and potential individual investors. To test the relationships between variables, structural equation modeling was used.

The findings indicated that investors’ attitude and perceived behavioral control had a significant influence on investment intentions. Further, perceived knowledge of COVID-19 improved the ability to predict the intention to invest. Moreover, psychological risk significantly moderated the association between subjective norms related to investors and their attitudes. Overall, the tested model was able to better account for the intention of investors in stock market investments.

In this study, only the investor reactions in the context of an emerging market were evaluated, and future studies could focus on different market contexts and perform comparative studies. Financial markets could be considered as a mechanism that has a direct impact on the wealth distribution of society, and the key findings of this study could be used to promote investment in emerging markets, where participation is comparatively low.

The TPB was expanded by incorporating investors’ perceived knowledge of COVID-19 and psychological risk dimensions, which were then tested in an emerging market context to fill the knowledge gap identified in the contemporary behavioral finance literature.