Nexus Between Risk Perception and Investment Decision Making the Case Study of Capital Territory

Abstract

This dissertation shows in the framework of Pakistan, a developing economy, the effects of risk perceptions—economic, market, social, and return on investment (ROI)—on investment decision-making. Data collected from 248 Islamabad investors utilizing a standardized Likert scale questionnaire using a quantitative research method. Using statistical instruments including correlation and regression analyses, the research evaluated the interactions between the dependent variable—investment decision-making—and the independent variables—economic risk, market risk, social risk, and ROI risk). The results show that investing decisions are influenced by all four forms of risk. Mild to substantial effects of economic risk and market risk underline the need of macroeconomic stability and competitive market dynamics in forming investor behavior. A major consideration is society risk, especially in culturally varied settings like Pakistan where ethical behavior and societal standards affect investment decisions. A major factor as well is ROI risk, which reflects the relevance of financial expectations and worries about reaching targeted returns. The research offers theoretical advances by extending the knowledge of risk perception as a multidimensional construct and pragmatic consequences for companies, financial consultants, and legislators. Customized plans to manage market uncertainty, fit society values, and control ROI expectations would help to boost investor confidence and stability of the market. With a cross-sectional approach, the study confined to Islamabad even if it makes contributions. To provide a more comprehensive knowledge, future research might investigate extra psychological and environmental elements in different geographical and longitudinal environments