The Impact of Peer Influence and Social Networks on Investor Perception and Mutual Fund Preference

Abstract

The adoption of mutual funds is a critical financial decision, influenced by various factors, including peer influence and social networks. The role of these factors in shaping individual choices regarding mutual funds remains underexplored. This study aims to bridge this gap by investigating the impact of peer influence and social networks on the adoption of mutual funds. The primary objective of this research is to observe a level to which peer inspiration & social network connections affect the decision-making process in adopting mutual funds. The study seeks to provide insights into the mechanisms through which these factors operate and contribute to individual choices in the context of mutual funds. For collecting and analysing data from a diverse sample of mutual funds customer across Rajasthan (N=200), quantitative method was used. Google form was used to gather information on participants' perceptions of peer influence, social network, and their adoption of mutual funds. Structural Equation Modelling (SEM) analysis was utilized to assess relationships between peer influence, social networks, and mutual fund preference, considering mediating and moderating effects. The study anticipates finding significant associations between peer influence, social network connections, and the adoption of mutual funds. The SEM analysis is expected to reveal the underlying mechanisms through which these factors exert their influence. It is hypothesized that individuals with strong ties to peers who have already adopted mutual funds are more likely to do so themselves. Moreover, the study aims to uncover potential variations in these relationships based on demographic and socio-economic factors.