08 Chapter3

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CHAPTER – 3
RESEARCH METHODOLOGY
"Research is considered to be formal, systematic, intensive process of carrying on the

scientific method of analysis. It involves a more systematic structure of investigation usually
resulting in some of formal record of procedures and report of result or conclusions."
J.W.Best (1999)
Research Methodology basically refers to the science of how a research is conducted

scientifically. It is a way to find out a solution to the problem in logical and systematic way.
The result of a given problem is also referred to as research problem. It helps us to
understand the process not just the product of research, and analyzes methods in addition to
the information obtained by them. The research methodology describes the flow of the
research process and serves as guidance for the research to carry out the research study. This
chapter deals with significant of the study and explains the various steps taken by the
research scholar in studying the research problem. The details of methodology are given in
the following sub-heads.
3.1 Description of Study Area

3.2 Sampling Procedure
3.3 Selection of Variables
3.4 Hypothesis
3.5 Statistical Tools and Methods of analysis
3.6 Research Strategy
3.7 Theoretical Framework and conceptual Diagram
3.1 Description of Study Area
The Universe of this study comprises of the employees working in public sector and private
sector banks in the city of Chennai. Chennai is one of the metropolitan cities in India and
also the capital of the Tamilnadu. Chennai, formerly known as Madras, is located on the
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Coromandel cost of Bay of Bengal and it is one of the biggest economic, cultural and
educational centres in South India. The city has a large commercial and industrial centre in
India and is known for its cultural heritage. Chennai city is administered by the Chennai
Corporation and the suburbs which comprise the metropolitan region are administered by
local municipalities, town panchayats and panchayat unions.
Reserve Bank of India ranked Chennai as third largest deposit centre and credit centre
nationwide as of June 2012. Even today, many of the bank branches and zonal offices are
housed in heritage structures belonging to the colonial era. Chennai is home to the first
European-style banking system in India with the establishment of the 'Madras Bank' on 21
June 1683, almost a century before the establishment of the first commercial banks, such as
the Bank of Hindustan and the General Bank of India, which was established in 1770 and
1786, respectively. Upon the recommendation of the British Finance Committee on the
formation of a government bank, the Madras Bank, then known as the 'Government Bank',
started functioning again from 1806. In 1843, the bank merged with the Carnatic Bank
(1788), the British Bank of Madras (1795) and the Asiatic Bank (1804) and became
the Bank of Madras, which was one of the three Presidency banks of India, the other two
being the Bank of Bengal and the Bank of Bombay. In 1921, the three Presidency banks
merged to form the Imperial Bank of India, which later became the State Bank of India in
1955.
Chennai is the headquarters of the Indian Bank, the Indian Overseas Bank and the
erstwhile Bharat Overseas Bank, which merged with the Indian Overseas Bank in
2007. Chennai city is home to the Southern Zonal office of the Reserve Bank of India, the
country's central bank, along with its zonal training centre and Reserve Bank Staff College,
one of the two colleges of the bank.
The city also houses the permanent back office of the World Bank, which is one of the
largest buildings owned by the bank outside its headquarters in Washington DC. The
Chennai back office handles accounting, corporate financial, administrative and Information
Technology services of the bank, in addition to several value-added operations of the bank
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that were earlier handled only in its Washington, DC office, including the bank's analytical
work in bond valuation which is estimated to be US$100 billion. Several foreign banks have
established their branches in the city. The first Sri Lankan Bank in India was established
when the Bank of Ceylon opened its branch in Madras on 31 October 1995.
Zonal Office of both public sector banks and private sector banks are located in the city of
Chennai. Zonal Offices of the banks control the entire southern states of India. In Chennai,
1632 branches of various banks are being operated. Branches of all nationalized banks,
private sector banks and foreign banks have its branches in the city of Chennai.
The map with important banks of Chennai City is given in Figure -11
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Figure -9 Map of Chennai with Important Bank details

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3.2 Sampling Procedure

3.2.1 Population
Respondents for this study were selected based on the total number of employees working in
Bank branches in the city of Chennai. The total banking employees were calculated based on
the Handbook of statistics on the Indian Economy published by The Director, Data
Management and Dissemination Division, Department of Statistics and Information
Management, Reserve Bank of India for the year 2015-16.
Chennai city has 1632 bank branches of Public Sector Banks (1179), Private Sector banks
(434), Regional Rural Banks (3), Foreign Banks (16) with 26360 employees working in
these branches.
The sample selection for this study is done by using snow ball sampling.
3.2.2 Selection of sample

A total number of 750 bank employees were selected by snow ball technique from 15
numbers of public sector and 24 numbers of private sector banks in the Chennai city. The
following table will reveal the number of respondents selected from each bank and the data
were collected.
Table 3.1 Details of number of respondents
S No Name of the Bank No of respondents
Public Sector
1 Andhra Bank 30
2 Bank of India 12
3 Canara Bank 21
4 George town Co-operative Bank 3
5 Dena Bank 28
6 IDBI Bank 4
7 Indian Bank 71
8 Indian Overseas Bank 94
9 Punjab National Bank 18
10 REPCO 1
11 Reserve Bank of India 21
12 SIDBI 1
13 State Bank Of India 54
14 Syndicate Bank 7
15 TNSC Bank 4
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S No Name of the Bank No of respondents

Private Sector Bank
1 UCO Bank 6
2 Axis Bank 39
3 BNP Paribas Bank 2
4 Citi Bank 2
5 City Union Bank 21
6 DBS Bank Ltd 2
7 DCB Bank 11
8 Deutsche Bank 3
9 Dhanalaxmi Bank 2
10 Equitas Bank 5
11 Federal Bank 19
12 HDFC Bank 51
13 ICICI Bank 38
14 Indusind Bank 93
15 Karnataka Bank 3
16 Karur Vysya Bank 5
17 Kotak Mahindra Bank 17
18 Lakshmi Vilas Bank 11
19 RBL Bank 19
20 South Indian Bank 2
21 Standard Chartered Bank 1
22 Tamilnad Merchantile Bank 3
23 World Bank 3
24 YES Bank 23
Grand Total 750
Source: Compiled Data
3.2.3 Research Design

Burns and Grove (2003:195) define a research design as “a blueprint for conducting a study
with maximum control over factors that may interfere with the validity of the findings”.
Parahoo (1997:142) describes a research design as “a plan that describes how, when and
where data are to be collected and analysed”. Polit et al (2001:167) define a research design
as “the researcher’s overall for answering the research question or testing the research
hypothesis”. Leedy (1997:195) defines research design as a plan for a study, providing the
overall framework for collecting data. MacMillan and Schumacher (2001:166) define it as a
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plan for selecting subjects, research sites, and data collection procedures to answer the
research question(s). They further indicate that the goal of a sound research design is to
provide results that are judged to be credible. For Durrheim (2004:29), research design is a
strategic framework for action that serves as a bridge between research questions and the
execution, or implementation of the research strategy.
Research Design is the conceptual framework within which researcher study is conducted
and it construct the blue print for collection of data, measurement of data, statistical tools for
analysis and analysis of variance.
The study has used a Descriptive design of conclusive nature. Descriptive research is chosen
to attain the research objectives as descriptive research studies are those studies which are
concerned with describing the characteristics of a particular individual, or of a group.
Descriptive research also concerned with specific predictions, with narration of facts and
characteristics concerning individual, group or situation (Kothari C.R. 2002). Most of the
social research comes under this category. Descriptive research includes surveys and major
purpose of the research is description of the state of affairs, as it exists at present.
3.2.4 Study Sample

The study sample comprises of both male and female employees (investors) working in
Public and Private sector Banks in Chennai. The number of employees working in the bank
branches in the city of Chennai has been arrived at with the statistics published by Reserve
Bank of India. Total number of employees working in public sector and private sector bank
constitutes 26360. Out of the total population, 13762 employees work for public sector
banks and 12598 employees work for private sector banks in Chennai.
Following Table 3.2 shows the total number of employees working in public sector and
private sector banks in Chennai.
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Table – 3.2 Details of employees working in Public sector and Private sector Banks
State Bank All
Year Regional Private
Bank Of India & Nationalised Foreign Scheduled
(End- Rural Sector
Group Its Banks Banks Commercial
March) Banks Banks
Associates Banks
Public Sector Private Sector
2015-
16 Officers 1530 4720 60 889 10532 17731
Clerks 1447 3535 43 50 814 5889
Sub-
ordinates 716 1695 16 16 298 2740
Total 3693 9951 118 955 11644 26360
Source: Reserve Bank of India
Sample has been arrived at using the following formula:
S= (1.96)2 * 26360 * 0.6 * (1-0.6)

(0.035)2 * (26360-1) + (1.96)2 *0.6 *(1-0.4)
S = 732 (Approx)
The researcher has taken a sample of 750 respondents from both public sector and private
sector banks.
3.2.5 Sample Frame work

Public Sector Banks
No of
Name of the Bank Grade / Designation Respondent
Officer / Assistant Manager 17
Deputy Manager / Manager 5
Andhra Bank
Senior Manager 2
Chief Manager / Assistant Vice President 6
Bank of India Deputy Manager / Manager 8
Senior Manager 2
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No of
Canara Bank
Senior Manager 3
Co-operative Officer / Assistant Manager 2
Bank, George
town Deputy Manager / Manager 1
Dena Bank Senior Manager 3
Assistant General Manager / Deputy Vice
President 5
IDBI Bank Deputy Manager / Manager 2
Senior Manager 1
Indian Bank
Senior Manager 13
Indian Overseas Senior Manager 10
Bank Chief Manager / Assistant Vice President 21
President 2
Punjab National
Bank Senior Manager 4
President 1
REPCO Officer / Assistant Manager 1
Reserve Bank of Deputy Manager / Manager 7
India Senior Manager 2
SIDBI Deputy Manager / Manager 1
State Bank Of Officer / Assistant Manager 25
India Deputy Manager / Manager 20
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No of
Senior Manager 3
President 2
Syndicate Bank Deputy Manager / Manager 4
TNSC Bank Deputy Manager / Manager 1
Senior Manager 1
UCO Bank Chief Manager / Assistant Vice President 1
President 1
World Bank Deputy Manager / Manager 3
Private Sector Banks
No of
Axis Bank
Senior Manager 8
BNP Paribas Bank Officer / Assistant Manager 2
Citi Bank
City Union Bank Deputy Manager / Manager 6
Senior Manager 1
Senior Manager 1
DBS Bank Ltd
DCB Bank Deputy Manager / Manager 5
Deutsche Bank
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No of
Deputy General Manager / Vice President 1
Dhanalaxmi Bank Deputy Manager / Manager 2
Equitas Bank
Senior Manager 1
Federal Bank
Senior Manager 2
General Manager / Senior Vice President 1
HDFC Bank Senior Manager 10
ICICI Bank Senior Manager 7
President 1
Senior Manager 5
Indusind Bank Chief Manager / Assistant Vice President 32
President 11
General Manager / Senior Vice President 3
Karnataka Bank
Karur Vysya Bank Senior Manager 2
President 2
Kotak Mahindra Deputy Manager / Manager 7
Bank Senior Manager 2
Lakshmi Vilas Officer / Assistant Manager 2
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No of
Bank Deputy Manager / Manager 4
Senior Manager 3
RBL Bank Senior Manager 7
President 3
South Indian Bank
Standard Chartered Assistant General Manager / Deputy Vice
Bank President 1
Tamilnad Deputy Manager / Manager 1
Merchantile Bank Chief Manager / Assistant Vice President 2
YES Bank Senior Manager 2
3.2.6 Sampling Technique

There are two types of sampling techniques namely Probability Sampling and Non-
probability Sampling. Probability Sampling is one in which each component has an equal
chance of being selected whereas in non-probability sampling, the researcher selects the
samples using his own judgment and every element does not have an equal chance of getting
selected (Malhotra, 2010). For this study, Non-probability Judgmental / Purposive and
Snowball Random Sampling were used. Purposive or Judgmental sampling strategy was
utilized considering that the respondents chosen will have adequate basic knowledge of
investment since they are working in banking / financial sector and happen to be using
various investment avenues. As the information regarding the population or the universe was
not fully available, the questionnaire study was also carried out using snowball random
sampling technique.
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In sociology, snowball sampling (or chain sampling, chain-referral sampling, referral

sampling) refers to a non-probability sampling technique in which a researcher begins with a
small population of known individuals and expands the sample by asking those initial
participants to identify others that should participate in the study. In other words, the sample
starts small but "snowballs" into a larger sample through the course of the research.
Snowball sampling is a popular technique among social scientists who wish to work with a
population that is difficult to identify or locate. Snowball sampling consists of two steps:
1. Identify potential subjects in the population. Often, only one or two subjects can be
found initially.
2. Ask those subjects to recruit other people (and then ask those people to recruit.
Participants should be made aware that they do not have to provide any other names.
These steps are repeated until the needed sample size is found.
3.2.7 Sources of Data

The study was based on both primary and secondary data. Since the study mainly depends
on the primary data, a well-structured pre-tested questionnaire was developed. The
questionnaire method was used to collect primary data from individual investors. For the
collection of primary data, a field survey was conducted and primary data were collected in
the form of well-structured questionnaire from both public and Private sector bank
employees who have the experience and interest in investment.
The secondary data were collected from various journals, published research articles,
periodicals, Indian report of various private agencies, various thesis and dissertations related
to savings and investment, and other related areas. The secondary data were collected from
the Directorate of Small Savings, Department of Posts and Telegraphs, National Savings
Institute (NSI), etc. Other relevant information for the present study is also collected from
various publications, annual reports, books, journals, magazines and bulletin, websites etc.
3.2.8 Data Collection Tool

Primary data was collected with the help of questionnaire which was distributed and
collected from the respondents in Chennai. The questionnaire is divided into five sub parts.
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Part 1 comprises of question seeking personal data of the investors regarding age, gender
marital status, educational qualification, grade / designation, experience, family type which
directly or indirectly determine the investment behaviour of the respondents.
Part II comprises of information relation to their annual income, annual investment,
percentage of saving which are multiple choice questions aimed to know the investment
potential of the respondents.
Part III comprises of dichotomous questions relating to awareness and investment. It also
comprises on priorities relating to objectives, preferences towards investment avenues, time
horizon, sources of information.
Part IV comprises of 5 point scale questions comprising of factors influencing investment,
level of risk, return, safety and satisfaction.
Part V comprises of likert scale questions relating to Investment belief, decision making,
attitude, investors behaviour, risk attitudes and factors considered for investment. The data
has been collected from the individual investors explaining the parameters to them.
3.2.9 Pilot Study
Bless et al. (2006:184) define the pilot study as a small study conducted prior to a larger
piece of research to determine whether the methodology, sampling, instruments and analysis
are adequate and appropriate. Janesick (1994:213) concurs that the pilot test in qualitative
research allows the researcher to make use of the actual qualitative interviews. According to
Wilkinson and Birmingham (2003:52), the researcher can begin to identify and correct
imperfections by piloting or testing a questionnaire with a select few people in order to
establish their clarity. Piloting further assists in eliminating ambiguous questions, as well as
in generating useful feedback on the structure and flow of the intended interview. A Pilot
study was conducted with the constructed questionnaire to sample of 60. The purpose of the
pilot study is to test the quality of the items in the questionnaire and to confirm the
feasibility of the study. After the study, slight modifications were made the questionnaire
simpler and easy to understand by the respondents.
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Reliability Study
The Cronbach alpha coefficient refers to the degree of correlation between the items of a
measuring construct (Sekaran & Bougie, 2010:162). The Cronbach alpha coefficient is a
reliable procedure widely used as to indicate how well the items are positively correlated to
one another (Drucker-Godard et al., 2001:203; Sekaran & Bougie, 2010:162). The Cronbach
alpha is based on correlation with in the items. If the items are strongly correlated with each
other, their internal consistency is high and the alpha coefficient will be close to one. On the
other hand, if the items are poorly formulated and do not correlate strongly, the alpha
coefficient will be close to zero.
Following table shows the reliability details:

Reliability Statistics
Cronbach's Alpha N of Items
.894 66
3.3 Selection of variables

3.3.1 Independent Variable
The independent variables selected for the study with the measurement details are given in
the table below.
Sl.
Demographic Variables Details of Measurement
No.
1 Age Completed years at the time of data collection
2 Gender Male or Female
3 Marital Status Single or Married
Under graduate / Graduate / Post Graduate /
4 Educational Qualification
Professional
Officer / Assistant Manager / Deputy Manager /
Manager / Senior Manager / Chief Manager /
Assistant Vice President / Deputy Vice
5 Cadre / Designation President / Vice President / Senior Vice
President / Assistant General Manager / Deputy
General Manager / General Manager / Chief
General Manager
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Sl.
Demographic Variables Details of Measurement
No.
6 Family Type Joint/Nuclear
7 Experience Number of Years of Experience
8 Annual Income Income earned in a year
3.3.2 Dependent Variables
Sl.
Dependent Variables Details of Measurement
No.
1 Savings Percentage of savings
2 Investment Amount invested in the year
3 Satisfaction Level of satisfaction measured in Likert scale
4 Expected Return Return expected during the year expressed in %
3.4 Hypothesis
H01: There is no significant relationship between demographic factors and satisfaction level
on investments.
H02: There is no significant association between demographic factors on annual investment.
H03: There is no significant difference between the mean variables of Age, Income and
Investment amount.
H04: There is no significant difference between the variables of expected return and
Investment amount.
H05: There is no significant difference between the select demographic variables and
Investment amount.
H06: There is no significant association between the demographic variables and awareness
of Investment avenues.
H07: Annual Investment is not significantly associated with Investment avenues.
H08: There is no significant correlation between risk and return among the investment
avenues.
H09: There are no significant association between demographic variables and expected
return from the investment.
H010: There is no significant association between the select demographic factors and
satisfaction.
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H0 11: There is no significant relationship between the Income of the respondents and
investment.
3.5 Statistical Tools and Methods of Analysis

3.5.1 Tabulation and classification of data
The data was collected through a questionnaire and tabulated. The data has been classified
on the basis of age, gender, marital status, family, qualification, cadre, annual income,
savings and annual investment held by the respondents. Cross tabulation has been done
according to different variables.
3.5.2 Frame work of data analysis

Statistical package for social science (SPSS) was used to analyse the data. It covers a wide
range of statistical procedures that allows data summarizing, defining whether the
differences between groups are significant or not statistically. SPSS also contains several
tools for data analyzing, including functions to record data and compute new variable as
well as merge and aggregate data files. Tools like Mean and Standard Deviation, Percentage
Analysis, Chi-Square Analysis, Analysis of Variance Test (ANOVA), Independent sample t-
test, Freidman’s RankAnalysis, Correlation and Regression Analysis were used. Structural
Equation Model was also implemented in the analysis.
3.5.3 Percentage Analysis

Percentage analysis was carried out for making simple comparisons. The frequency of the
particular cell is multiplied by 100 and divided by the total number of respondents to arrive
at the percentage.
3.5.4 ANOVA
Analysis of Variance (ANOVA) has been used to find the significant mean difference if any,
between the Public and Private sector bank employees towards the various variables like
Level of investment, Perception on return on investment and level of satisfaction.
3.5.5 Chi-square test

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Chi-square test, a non-parametric test is used to find whether significant association exists
between the two attributes namely the demographic such as age, gender, marital status,
educational qualification, designation and annual income with awareness level, Investment
level and satisfaction level.
3.5.6 Correlation
Correlation analysis has been used to find the degree of relationship between two variables.
It is the statistical relationship between two or more variables such that systematic changes
in the value of one variable are accompanied by changes in the other. High correlation value
indicates high degree of relationship between two variables. Pearson’s product moment
correlation coefficient was calculated to find out the degree of relationship between the
demographic profile characteristics and the dependent variables of this study.
3.5.7 Multiple Regressions

It is a statistical technique that predicts value of one variable on the basis of two or more
variables. When there are two or more independent variables, the analysis that describes
such relationship is multiple regressions. This analysis is adopted where there is one
dependent variable that is presumed to be a function of two or more independent variables.
When a factor is dependent on more than one dependent factor the simple correlation
analysis will not reveal the combined relationship. Hence for this purpose multiple
regression technique was used to reveal the linear relationship between the dependent
variable and the independent variable. It was used in our study to find out the relationship
between the demographic and the level of investment of the employees.
3.5.8 Independent sample t-Test

A statistical examination of two population means. A two-sample t-test examines whether
two samples are different and is commonly used when the variances of two normal
distributions are unknown and various groups like preference for investment, Risk
Perception, Level of investment, Perception on return on investment and level of
satisfaction.
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3.5.9 Friedman test

The Friedman test is the non-parametric test alternative to one way ANOVA with repeated
measures. It is used to test for differences between the groups when the dependent variable
being measured is ordinal scale. It can also be used for continuous data that has violated the
assumptions necessary to run the one-way ANOVA with repeated measures. We have used
this in our study to find out the extent of priority given by the employees towards preference
for investment, risk perception on investment, level of investment and level of satisfaction.
3.5.10 Garrett’s ranking

To find out the significant factor which influences the respondent, Garrett’s ranking
technique was used. As per Garrett ranking method, respondents have been asked to assign
the rank for all factors and the outcome of such ranking has been converted into score value
with the help of the following formula:
Percent position = 100 (Rij – 0.5) / Nj
Where
Rij = Rank given for the ith variable by jth respondents
Nj = Number of variable ranked by jth respondents
With the help of Garrett’s Table, the percent position estimated is converted into scores.
Then for each factor, the scores of each individual are added and then total value of scores
and mean values of score is calculated. The factors having highest mean value is considered
to be the most important factor.
3.5.11 Factor Analysis

Factor analysis is a statistical method used to describe variability among observed,
correlated variables in terms of a potentially lower number of unobserved, uncorrelated
variables called factors. In other words, the variations in three or four observed variables
mainly reflect the variations in fewer such unobserved variables. Factor analysis searches for
such joint variations in response to unobserved latent variables. The observed variables are
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modeled as linear combinations of the potential factors, plus "error" terms. The information
gained about the interdependencies between observed variables are used later to reduce the
set of variables in a dataset. Factor analysis originated in psychometrics, and is used in
social sciences, marketing, behavioural sciences, product management, operations research,
and other applied sciences that deal with large quantities of data.
Using all the investment options on investment belief, Decision making, Attitude towards
investment, Investors behaviour, Risk attitude perceived and factors considered for
investment. Factor analysis is performed in order to group these options on priority basis
based on the strength of inter-correlation from them called ‘Factors’ and cluster these
options in to the factors extracted.
Exploratory Factor Analysis: The primary data would be first tested for its suitability
using KMO and Barlette’s test. Kaiser-Meyer-Olkin Measure of Sampling Adequacy
(KMO) has been employed to examine the factorability in the samples. KMO is a sampling
adequacy index, which lie between 0 to 1, with high values between 0.6 and 1.0 inferthat
Exploratory Factor Analysis is suitable and relevant (Tabachnick & Fidell, 2007). Bartlett's
test of Sphericity attempts to access the hypothesis that the correlation matrix represents an
identity matrix where all diagonal elements are characterized as 1 and all off-diagonal
elements are represented by 0, signifying that all the research variables are uncorrelated. If
the Significant value for this analysis is below 0.05, we reject the null hypothesis that the
population matrix is an identity matrix (Field, 2013). The Significant value for this analysis
lead to reject the null hypothesis and conclude that there are correlations in the data set that
are suitable for factor analysis. The global implication of correlation matrices is examined
with Bartlett‟s Test of Sphericity, if it provides support for the reliability of the factor
analysis of the data samples.
After verifying the data for its suitability for factor analysis, Exploratory Factor Analysis
(EFA) was conducted. Exploratory Factor Analysis (EFA) is normally conducted to examine
the association between the observed and latent variables which is unknown or uncertain
(Byrne, 2010). This analysis would extract the minimum number of factors on the basis of
correlation between latent and observed variables (DeCoster, 1998). This correlation is
represented by factor loadings where, the item that measures the intended factor will load
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high on that factor (Byrne, 2010). Exploratory Factor Analysis is also used to develop and
validate an instrument in case where measures are assessed by the researcher from earlier
literature or other sources (Ruscio & Roche, 2012). The factorial validity help to confirm
whether the data collected for a particular group of variables does or does not represent the
latent constructs.
In the context of the study, Principle Component method, an important technique in the
Exploratory Factor Analysis process has been used to examine the factors influencing
Investment Behavior and their correlations in the data obtained. Usually, the initial factor
extraction does not give interpretable factors. Rotation makes larger loading even larger and
smaller loadings even smaller. Therefore, process of rotation provides factors that can be
named and interpreted. Varimax rotation has been used as it provides clear separation of
factors (Dhillon and Goldstein, 1984).
There were 66 items in the study labeled under the heads Investment Belief, Attitude,
Investor’s behaviour, Risk attitude. The variable loading value of above 0.50 is considered
significant (Hair et. al., 2010). The Exploratory Factor analysis was run using Principal
component factoring and Varimax Rotation. The variables with factor loading less than 0.50
were dropped.
Constructs of the research

The study consists of five (5) latent constructs that are measured by one or more variables
(observed variables). Latent variables are factors that cannot be observed directly i.e. they
cannot be measured whereas the observed variables are the factors that can be measured
directly. The latent variable is thus linked to an observed variable thereby making its
measurement possible (Byrne, 2010). The Latent variable in the study are Investment Belief,
Investment Decision making, Attitude towards Investment, Investment Behaviour and Risk
Attitude Perceived and the Observed Variables are the indicators measuring these
constructs. The observed variables were found on the basis of literature review.
This part of the analysis explains the relationship between variables diagrammatically. The
causal relationship between variables (Latent and Observed) has been determined by using
Structural Equation Modeling (SEM) (Hair et. al., 2010). Structural Equation Modeling
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assesses the direct and indirect relationships among the studied variables by constructing
two models: Measurement Model and Structural Model (Kaplan, 2008). Measurement
Model is represented by Confirmatory factor Analysis (CFA) which is concerned only with
the extent of relationship between observed variables and their latent constructs. It is
assumed that the observed variables will fully load on their constructs and will have zero
loadings on the other factors (Byrne, 2010). On the other hand, Structural Model represents
the relationship between latent constructs i.e., impact of change in one latent variable on
another. The proposed hypotheses are tested statistically to determine whether the variables
are consistent with the data or not. The suitability of goodness-of-fit proves the existence of
relationship between variables in the study. It is believed that, it is highly unlikely to get a
perfect-fit between the hypothesized model and the observed data, the discrepancy is known
as residual (Byrne, 2010).
Measures of Model Fit

In order to know whether a model that reflects the data, fits the underlying theory or not,
model fit indices are used. There are lots of fit indices available with various opinions as to
which model fit should be used and what should be the threshold values of these indices
(Hooper, Coughlan & Mullen, 2008). Kaplan (2008) considers assessing the model fit as one
of the most important steps in Structural Equation Modeling. The following indices are
widely used in examining the model fit:
Absolute Fit Indices

An absolute measure of fit presumes that the best fitting model has a fit of zero (Kenny,
2014)). The measures then examine as to how far the model is from zero. These fit indices
are known as badness measures of fit. The lower the value of these indices the better it is.
Chi-Squared test, RMSEA, GFI, AGFI, the RMR and the SRMR are some of the indices
included in this category (Hooper, Coughlan & Mullen, 2008).
Chi-squared test: The chi-squared test is the traditional fit statistic, which is reported in
most of the SEM analysis. It assesses the magnitude of discrepancy between the sample and
fitted covariance matrices (Hu and Bentler, 1999). As it is regarded as badness of fit statistic
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(Kline, 2005; Mulaik et al, 1989), the good model fit shows an insignificant result at 5%
level of confidence interval. But since the fit suffers from some limitations like assuming
multivariate normality and its sensitivity to sample size (Hooper, Coughlan & Mullen,
2008), an alternative indices is referred to assess the model fit. The alternative index is
Wheaton et al (1977) relative/normed chi-square (χ2/df) or CMIN/df. The acceptable
threshold of this alternative index is recommended as ranging between 2 and 5 (Wheaton et
al, 1977; Tabachnick and Fidell, 2007).
Root Mean Square Error of approximation (RMSEA): This statistic or index is used to
determine how fine the model developed through structural equation modeling (SEM) fits
the population covariance matrix with obtained values of the selected variables (Hooper,
Coughlan & Mullen, 2008). Since RMSEA is a measure of error of approximation, it is also
commonly known as population-based index. This Index is also referred as “badness of fit”
index wherein a value of 0 signifies the absolute fit and any value higher or closer to 0.10
signifies a poor fit. Originally, according to MacCallum, Browne and Sugawara (1996),
RMSEA values close to 0.01 indicates an excellent fit, values close to 0.05 indicates good or
close approximation fit and the values close to 0.08 indicates reasonable error of
approximation with a mediocre fit. Subsequently studies conducted by Hu and Bentler,
1999, Steiger, 2007 observed that the cut-off value of 0.7 or 0.6 or lesser indicates good fit
of the model. RMSEA index can be employed in two ways different ways to evaluate the
model’s fit. Firstly, it can be used as descriptive as a standard measure which is not coupled
directly to the scale of theoretical constructs (also referred as latent variables) by examining
the sample values and compare it against a particular cut-off values of 0.01, 0.05 and 0.10.
Secondly it can be used inferentially by examining the distributional properties to a)
determine confidence intervals and b) conduct hypothesis testing. Since mostly the above
mentioned cut-off values of population estimates may differ from sample estimates,
confidence intervals can help us to determine and measure that differential element or gap
between sample and population values to gain a confidence level over these parametric
estimates for their intended use. P of Close Fit (PCLOSE) is use to test the null hypothesis
that the value of RMSEA is no greater than 0.05. PCLOSE value greater than 0.05 can be
concluded that RMSEA is less than 0.05 and there is a good fit of the proposed or developed
101
model. If the value of PClose is less than 0.05, the model is worst fit model because at
significant level of 0.05 the null hypothesis is rejected. Therefore, for mode to be a good fit,
the value of PClose should be above 0.05 so as to accept the null hypothesis that RMSEA is
close to model fit (Kenny, 2014).
Goodness-of-fit-index (GFI) & Adjusted Goodness-of fit index (AGFI): GFI is a

goodness-of-fit index that examines the fit between observed covariance matrix and the
covariance accounted for by the model (Hooper, Coughlan & Mullen, 2008). Though the
recommended cut-off of the index is 0.90 but in case of low factor loadings and low sample
sizes the cut-off of 0.95 is considered suitable (Miles and Shevlin, 1998). Adjusted
goodness-of-fit index is another index related to GFI and adjusts GFI based on degrees of
freedom (Hooper, Coughlan & Mullen, 2008). The values of AGFI ranges between 0 & 1
and the value above 0.9 is considered appropriate indicating good fit of the model.
Moreover, due to the sensitivity of the measures to sample size, it was recommended by
Sharma et al (2005) to not to use these index.
Relative Fit Indices

Relative fit indices are the group of indices that do not use the value of chi-square for
assessing the model fit but rather compare its value to a base model (Hooper, Coughlan &
Mullen, 2008). The more is the variance between the overall fit of the two models, the larger
the values of these descriptive statistics (Byrne, 2010).
The three significant relative indices used are Comparative Fit Index (CFI), Normed Fit
Index (NFI) and Tucker Lewis Index (TLI). All these indices assess the model fit by
comparing the chi-square value of the model with the chi-square value of independence
model. NFI & TLI suffers from a limitation that they are sensitive to sample size and does
not give reliable result if the sample size is below 200 (Mulaik et al, 1989) though the other
indices can indicates good fit. The values of these indices can range from 0 to 1 with the
recommended cut-offs of 0.95 or more (Hu and Bentler, 1999) for a well suited model. CFI
is considered to be the revised form of NFI as it gives reliable results even for small sample
102
sizes (Tabachnick and Fidell, 2007). The value of this measure also ranges between 0 and 1
with a recommended cut-off of 0.95 or more (Hu and Bentler, 1999).
3.5.12 Structural Equation Modeling

Structural Equation Modeling is a very general statistical modeling technique, which is
widely used in the behavioral sciences. It can be viewed as a combination of factor analysis
and regression or path analysis. We used this model in our study and the following are the
variables used to select the model.
3.6 Research Strategy

The following table will reveal the Research Strategy followed in this research.
Research Design Descriptive research
Study Population Public Sector & Private sector Bank Employees
Population Source As per Reserve Bank of India Statistics as of March

2016.
Study Area Bank Employees working in the city of Chennai.
Sample Frame Employees working in Public sector & Private
sector Bank Employees in the age group
between 21 and 60 and at various levels of
Management.
Sampling Unit Persons working in Private sector Banks
Sampling Method Snow Ball sampling
Sample Size 750 (375 each from Public sector Bank and Private
sector Bank)
Nature of Data Both Primary and Secondary
Sources of Primary Data Survey method through Questionnaire
Sources of Secondary Data Journals, Magazines, Previous Research Reports &

Websites
Tool used for Data collection Pre tested and Structured Questionnaire
Type of Questions Close ended, Multiple choice
Establishing Validity Carried out to check Validity of constructed

Questionnaire
Test of Reliability Cronbach’s Alpha (Result 0.897)
103
3.7 THEORETICAL FRAMEWORK

3.7.1 Theories on individual’s behavior
This segment provides an abstract of the theoretical framework adhered during the course of
this research, reviews the literature and existing theoretical model, architecture and design
described and explained in the Theory of Reasoned Action (TRA) which presents most
relevant components associated with investor behavior.
3.7.2 Theory of Reasoned Action

The present study is on the basis of the components presented in the Theory of Reasoned
Action, which was originally described and elaborated in 1967 as an extension to the
expectancy-value structural framework. This has been applied to comprehend an
individual’s behavior and predict it. This theory presents a proposition that each and every
individual thinks wisely and logically uses the available information to reach his decisions
(Ajzen and Fishbein, 1980). It is also stated that an investor does consider the consequences
and benefits of their actions before making any decisions about their conduct or behavior
related to any investment they make. Hence it resulted into a conceptual theory known as
theory of reasoned action.
This Theory of Reasoned Action refers to a framework build from behavioral intention and
fundamentally describes the relationship between attitude and behavior of an individual.
According to this theory, an individual’s intention is a resultant from the function of two
essential attributes. The nature of the first attribute is personal to the individual and the
second attribute reflects the influence of the society on that individual. This evidently
concludes that an attitude and social pressure forms an individual’s intention (Azjen and
Fishbein, 1980). Attitude is a personal factor that determines whether a firm behavior should
be exhibited or not. The second determinant is a subjective norm, which determines the
influence of social pressures on an investor’s behavior (Azjen & Fisbein, 1980). This theory
of reasoned action provides us with one of the most significant techniques to effectively
predict human behavior and the related behavioral characteristics. Research on this theory
was primarily only focused on the voluntary behaviors because the other kinds of behaviors
could be result of external elements influencing the behavior. Impulsive behaviours and
Habitual actions are also excluded during the development of this theory. This theory of
104
reasoned action has proven to be relatively effective in understanding the human behavior
and its related dispositions (Sheppard and Hartwick, 1988). This theory presents useful
conceptual model, which offers a technique to conveniently determine the intermediate
variables and elements in developing a relationship between attitude and behavior. This
Theory proposes that individual’s behavior is influenced by his behavioral intentions to
exhibit or perform a specific behavior. Intentions of every individual refer to his decisions to
act in a specific way. Intentions can be determined by a mathematical function of two
fundamental elements. First element is the attitude towards performing an act or behavior,
which is an evaluative reaction that results from perceived implications often associated
with behavior. The second element is the influence of significant others generally referred as
subjective norms, which is derived from the beliefs about the expectations of close referents
and the individual’s motivation to follow their expectations.
Hence the theory of reasoned action can be compiled by stating that the intentions to engage
in a specific behavior influence the individual’s behavior. Secondly the individual’s
intentions are encapsulated by attitude towards the behavior and the subjective norm.
Subjective norms are driven by normative beliefs and the desire to be in agreement with the
significant action and the attitude is driven by behavioral beliefs and the evaluation of the
anticipated outcomes.
Limitations in Theory of Reasoned Action
Even though theory of reasoned action is most widely preferred in research, several
criticisms have been raised against this theory because of some of its limitations. Many
researchers have presented an argument that apart from attitude and subjective norm there
are other determinants of one’s intention, to which this theory does not cater. Most common
of them are cognitive reactions towards individual’s attitude (Ajzen and Driver, 1992), habit
of an individual (Triandis, 1980), self-identity (Granberg and Holmberg, 1990) and moral
obligations for an individual (Schartz and Tessler, 1972). It does not accurately determine
behavioral constraints due to lack of opportunities and resources such as time, skill and
money. This theory of reasoned action also had some limitations in predicting behavioral
intentions in a situation when the individual does not have free control on his behavior. In
105
order to overcome these limitations, another theory referred as Theory of Planned Behavior
was developed by adding another variable referring to perceived behavioral control.
3.7.3 Theory of Planned Behavior

Theory of planned behavior was developed in 1985 by Ajzen. This theory is considered as
one of the most commonly used theories in human psychology in observing and predicting
human behavior. Theory of planned behavior has developed as one of the important theories
with a broad spectrum of influence and is used in research on human behavior (Lai & Hung,
2010). This theory suggests that the perceived behavioral control of an individual is the most
important influencing factor of his behavioral intentions while making any decision (Chiou,
1998). The model of perceived behavioral control is stable with concept of perceived self-
ability within a general model to study relationship between attitude, subjective norm and
behavioral intention developed by Bandura (1982) with the wisdom of how wisely an
individual would take action to handle any particular situation. This theory also measures
the most challenging behaviors that require the special skills, opportunities, knowledge,
resources and cooperation from others (Ajzen, 1991). The extent to which one’s intentions
to act and behave in a particular way is carried out, is driven by the amount of control and
availability of resources one has over his behavior. This study is primarily based only on
Theory of reasoned action, theory is planned behavior is out of scope of this research
objectives and has been mentioned just for the reference.
Conceptual Model
106
The conceptual model considered for the study in given in the above diagram. Investment
belief, Risk and subjective norms influence the investment behaviour of the investors.
Decision making of the investor is influenced by the investment behaviour and satisfaction
is influenced by the decision making process of the investors.
The collected data were subjected to above mentioned analysis using SPSS package and the
results are discussed in the next chapter RESULTS AND DISCUSSION.

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"Research is considered to be formal, systematic, intensive process of carrying on the

Research Methodology basically refers to the science of how a research is conducted

3.1 Description of Study Area

3.1 Description of Study Area

Figure -9 Map of Chennai with Important Bank details

3.2 Sampling Procedure

3.2.2 Selection of sample

S No Name of the Bank No of respondents

3.2.3 Research Design

3.2.4 Study Sample

Sample has been arrived at using the following formula:

S= (1.96)2 * 26360 * 0.6 * (1-0.6)

3.2.5 Sample Frame work

Private Sector Banks

3.2.6 Sampling Technique

In sociology, snowball sampling (or chain sampling, chain-referral sampling, referral

3.2.7 Sources of Data

3.2.8 Data Collection Tool

3.2.9 Pilot Study

Following table shows the reliability details:

3.3 Selection of variables

3.3.2 Dependent Variables

3.5 Statistical Tools and Methods of Analysis

3.5.2 Frame work of data analysis

3.5.3 Percentage Analysis

3.5.5 Chi-square test

3.5.7 Multiple Regressions

3.5.8 Independent sample t-Test

3.5.9 Friedman test

3.5.10 Garrett’s ranking

3.5.11 Factor Analysis

Constructs of the research

Measures of Model Fit

Absolute Fit Indices

Goodness-of-fit-index (GFI) & Adjusted Goodness-of fit index (AGFI): GFI is a

Relative Fit Indices

3.5.12 Structural Equation Modeling

3.6 Research Strategy

Population Source As per Reserve Bank of India Statistics as of March

Sources of Secondary Data Journals, Magazines, Previous Research Reports &

Establishing Validity Carried out to check Validity of constructed

3.7 THEORETICAL FRAMEWORK

3.7.2 Theory of Reasoned Action

Limitations in Theory of Reasoned Action

3.7.3 Theory of Planned Behavior

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