A Study on How Behavioral Biases of an Investor Act as Antecedent in Creating Financial Scams in India.

Investments are subject to market risk, please read the offer document carefully before investing” says the disclaimer in the every advertisement which asks for money from the investors but do we as an investor really understand the meaning of this statement. May b till the investor understands the damage has already been done. A large proportion of Indian investors generally depend on others for their financial planning. The major reasons for the same are lack of analytical skills of an investor and his/her psychological traits towards risk tolerance. The earlier studies regarding investor sentiments suggests that the investor is more inclined towards proving their decision correct instead of finding the errors they have taken during financial decision making. The financial advisors or the people in related business are always ready to take benefit of this weakness of investor and try to find out the loopholes in the system for their own benefit. This ultimately led to generation of various unethical acts or scams. The study here is focused on finding these behavioral aspects of the individuals that make them biased during their financial decision making process; and how this biasness help the other individuals to get indulged into those illegal and unethical practices that create a scam.