Influence of Subjective Investment Knowledge on Investment Intention: An Individual Investor's Perspective from Nairobi Securities Exchange

Abstract

The number on individual investors who are actively involved in stock markets globally has been fluctuating over time. This can be attributed to factors such as subjective investment knowledge. The purpose of this study was to assess the determinants of investment intentions of individual stock market investors in Nairobi Securities Exchange.  This paper is based on findings of a PhD study that was conducted in Nairobi County, Kenya between 2015 and 2016. The specific objective was to investigate the effect of subjective investment knowledge on investment intention of individual investors in Kenya. In addition, the study sought to build a theoretical model to explain investment intentions in financial securities by individual investors by examining the relationships between subjective investment knowledge and investment intentions. A cross sectional survey, multi-stage sampling technique involving 423 randomly selected individual investors participated. Validity and reliability of research instruments was ascertained through a pre-test and pilot survey. Data was collected using structured questionnaires and interview guides.  A 74.0% response rate was attained on the basis of 313 duly filled questionnaires and the resulting data was analyzed using statistical package for social sciences (SPSS) software Version 23.0.  Using hierarchical regression analysis, empirical results showed that subjective investment knowledge had a positive and statistically significant effect on investment intentions of individual investors. The study recommends increased investor education to build self-assessed knowledge and investor confidence since according to the findings, subjective investment knowledge had the highest effect on investment intention. Additionally, to stimulate investments in financial securities, empowering individual investors with financial knowledge and demonstrating economic value would yield an increase in investments by individual investors.