The Compounding Effect of Investors’ Cognition and Risk Absorption Potential on Enhancing the Level of Interest towards Investment in the Domestic Capital Market

Round 1

Reviewer 1 Report

The paper presents the important issue of the attitudes of retail investors on the capital markets, using the sample of investors from one of the Indian states. The overall quality of the paper is good - the analysis is based on sound methodology. However, the paper's weakness is the quality of the presentation - substantial parts of the paper are poorly written and chaotic. I recommend in-depth copy-editing of the manuscript. Other specific comments:

1. Time period of the analysis should be mentioned in the abstract
2. The analysis is conducted on a rather narrow sample of investors. Authors should carefully explain the possibility to formulate generalisations (in particular for the non-Indian readers).
3. Some terms used are too vague. See., e.g., 'open economy concept' in the very first sentence.
4. There are some serious issues with the paper's formatting.
5. There are some important elements missing in the final section:

• comparison to the results of the previous similar studies,
• limitations of the analysis,
• directions of the future research,
• broader implications of the study.

Author Response

Point -1.Time period of the analysis should be mentioned in the abstract

Response-1-  The time period of the analysis is now mentioned in the research methodology part.

Point-2.The analysis is conducted on a rather narrow sample of investors. Authors should carefully explain the possibility to formulate generalisations (in particular for the non-Indian readers).

Response-2.  As the sample so collected for the study are specific investors with 4 traits. In this case the the population is infinite. Hence, I used the Cochran’s formula for deciding the sample size, which is 384. My sample size is 392, which is less because the sample is collected in the pandemic time. The study is not just restricted to India but it influence other developing nations of south east Asia depending on the FDI and FPI contribution. The edited manuscripts cleared all queries relating to generalisations with different developing countries.

Point-3. Some terms used are too vague. See., e.g., 'open economy concept' in the very first sentence.

Response3- It has been corrected in the edited manuscript. 

Point-4. There are some serious issues with the paper's formatting.

Response-4-  Issues with formatting has been addressed.  

Point-5 There are some important elements missing in the final section.

• comparison to the results of the previous similar studies,
• limitations of the analysis,
• directions of the future research,
• broader implications of the study

Response-5. 1No such study has ever been done in the field of behavioural finance and risk management. I have addressed a new concept where different dimensions of cognition affects the investment behaviour of the investor and their risk taking potential. So comparison can not be done as other study relating to cognition is based on only product purchase decision making but  the study has help to know the understanding of  financial product consumer specifically. 

5.2 Limitation of the study is mentioned in section-1.6.

5.3 Scope for future research is mentioned in section 1.7.

5.4 Broader implication of the study is now presented in the finding and discussion section and conclusion part.

Thank you sir for your recommendations. It will definitely help me to write better research article in future.

Reviewer 2 Report

Dear Author, 

Please find the attached review Report.

Comments for author File: Comments.pdf

Author Response

Point -1.There is a 22% Similarity index. The authors must reduce it below 15%.

Response-1- The similarity index is way below 15%. Please do not consider the reference part as the APA style format is similar to every article. Please test again without the reference part. 

Point-2. The manuscript needs a professional proofreading.

Response-2. Sorry for the errors. The error and mistakes are now corrected and sent. 

Point-3. Abstract revision (complete / Major concern)

Response3- Major revision in the abstract done as per the recommendation of  the reviewers. Thank you so much for the recommendations. It helped to understand many facts required for quality journals. 

Point-4. Sampling and Data (Need to explain in detail / Major concern)

Response-4- Explained in details as per reviewer's recommendation. 

Point-5 Introduction Section (Please re-write holistically)

Response-5. Clearly written as per requirement. Linked similar context of developing countries of south east Asia.  Connected the paragraph and clearly illustrated the need of the study. 

Point-6-There is a need to discuss the theoretical and practical contributions of this study in separate subsections.

Response-6. Practical contribution has been shown in the corrected manuscript and theoretical concept has been made clear.

Point-7.The conclusion section needs to revise

Response-7. Conclusion has been revised and corrected. 

Thank you so much sir for your suggestion and recommendations. We leant a lot from your review comments. 

Reviewer 3 Report

The investment attitude is very important in last years. The paper provides service in the investment community. However, there are some important drawbacks. The stochastic model is not completely successful. The information from the population can be biased. The assumption on the random variables are not explicitly described (normal distribution, parameters, etc). The inference is not enough informative. The conclusions does not explain the reason of the hesitation from the side of investor.

Author Response

Point-1 The investment attitude is very important in last years. The paper provides service in the investment community. However, there are some important drawbacks. The stochastic model is not completely successful. The information from the population can be biased. The assumption on the random variables are not explicitly described (normal distribution, parameters, etc). The inference is not enough informative. The conclusions does not explain the reason of the hesitation from the side of investor.

Response-1- Respected Sir, as the questionnaire contents a lot of questions, so the table emerged in the descriptive statistics, which displays the mean, median, mode, standard deviation, skewness and kurtosis is quite big to be presented in the article. I have checked the data normaility and extended my research there upon. However other parameters like scale reliability, Multicollinearity, data adequacy, Heteroscedasticity and significant level testing is presented in the study.

The inferences has been corrected as per the recommendations. 

Some changes is made to address the reviewer's comments. 

Thank you so much sir for your guidance. It has been very helpful to acquire knowledge to write a better manuscript. 

Round 2

Reviewer 2 Report

Dear Authors, 

Thank you for incorporating changes. However I could not find your Author Response file, I had commented in detail.  You had just responded to the points of my main suggestion, but not too detailed comments.

I am attaching the file again and send me a detailed revised version, in my previous comments I asked to add more sub-sections, etc.

See the attached report.

Comments for author File: Comments.pdf

Author Response

Reviewer Comments to Author:

The study is quite interesting, and the outcomes of this paper are a valuable addition to literature (after major changes/revision). This study investigates the different dimensions of cognition, which affect investment attitude and the different characteristics of risk absorption. The author allegedly argues that the dimensions of cognition (hot, cold, social, and meta) significantly impact the level of interest towards investment and can enhance interest. This paper contributes to the literature by showing evidence of Indian Investors’ Cognition with Risk Absorption Potential, limited to one country data.

India being the 6^th largest economy on the basis of the GDP and a developing nation, its importance in the field of capital sufficiency is much more important unlike any other developing nation for the sustainable global economy. The paper, however shows the reference of India with many other developing countries in the Southeast Asian region and in the subcontinent region.  

Overall, this article is not written clearly, but it should not be granted publication in JRFM. There are problems with English, i.e., Punctuations, grammar, and propositions. The paper needs copy editing. In addition, critical literature, hypotheses development, discussion of findings, and results reporting are major and significant concerns of this article, and authors used the personal pronoun ‘we’ or ‘our’ throughout the paper and should replace it with the word “this study or this research” See comments below for details.

All the modifications have been done as per the instructions of the reviewers. The personal pronoun was removed and replaced with the recommended words.

Below are major concerns and areas of improvement with suggestions.

1. Originality: The paper investigates the different dimensions of cognition, which affect investment attitude, and the different risk absorption characteristics. The document did not contain significant new information appropriate to justify the publication. There is a need to revise the paper title, and the current title does not portray the paper's actual meaning.

No researcher has ever studied the impact of the dimensions of cognition impacting investment decision. Cognition, being the part psychological study was never taken in to account while studying its impact in the investment attitude. However some studies have been done to show its impact on purchase decision. Basing on the tri-component model of attitude formation and taking financial investment as an investment oriented product, the researchers have contributed in this regard. The paper title has been changed to depict the actual meaning of the paper.

2. Abstract: The abstract is not well written. There is a need to revise with explicit contents of the abstract, i.e., the main issue, sampling, a statistical tool, methods, results, and implication. The author’s should provide a precise and focused abstract.

• What is the practical and theoretical contribution of this article to literature?
• The sampling criteria, population, and unit of analysis for the selection of respondents are missing. The author should highlight the sampling criteria for more clarity to readers.
• As a suggestion for improvement, the author should not use the same Keywords as Paper Title. It is encouraged to used different keywords that are not in the Paper title. It will enhance paper searchability after the publication.

Changes have been made as per the above instruction in the new edited manuscript.

3. Introduction: The introduction section is not well written. There are ambiguous statements and no clarity in the introduction section.

• The introduction section is not started with a broader area and issue or in a global context. There is no synthesis in writing an introduction section.
• There is less debate on the targeted country problem. It will add more value to the paper if the author explains some statistics and recent issues.
• In the Introduction section, the brief discussions of methods, tools, sampling, and findings are missing.
• An important question to answer is, “Why should JRFM readers be interested in the results of this paper, which scrutinized only India data?” The reason given is not supportive. Are the findings generalizable to other developing countries like India and Indonesia? The author(s) needs to improve underwritten motivation.

As it was mentioned earlier, India being the 6^th largest economy and 2^nd in the Asian continent, its importance in the world economy is unparallel. India’s contribution to South Asian countries is very much imperative. India with many South Asian countries faces the same problems and the generalisation theory has been depicted in the edited manuscript with other countries. 

• The author(s) needs to write the full name of any “organization or regulatory body” the first time as appears in the text, i.e., DEMAT. Later, the author(s) can use abbreviations throughout the paper.

Changed as per the instruction

• Author(s) did not follow the academic paper's standard content, i.e., Introduction, Literature Review; follow as per journal requirements and guidelines.
• There is no roadmap at the end of the introduction that conveys the rest of the paper's structure.

4. Relationship to Literature: The paper did not incorporate major literature on risk absorption; investment decision, and the paper does not sufficiently cover recent research in the area. Helpful in this regard would be to include relevant research recently covered in top journals of similar scope. Further, work needs to be done to support the findings based on the current literature, as a recent theory in the area is directly counter to what was found.

The word “risk absorption” is a new word coined by the researchers. This risk absorption characteristic is a special trait, which is an augmented concept of risk tolerance with specific clauses as described in the methodology part. The cognition on the other hand is basically from the psychological study, which is integrated to behavioural finance with regard to understanding and applicability. The literatures in this regard are to substantiate the relationship of cognition, risk absorption and degree of interest in investment. Not much literatures are found in this regard.

• Author(s) did not use any underpinning theory to justify this research, i.e., investment theory etc. This is the major concern of this paper; the author(s) should highlight how this research contributes to the theory or the contribution of the theory. The authors did not discuss much with the use of developed theories in this area.
• There is a need to add more critical recent literature and based on theoretical argumentation.
• The hypotheses development is poorly written; author(s) should cite previous studies relevant to proposed hypotheses, i.e., international and local perspectives studies in the light of underpinning theory.
• Please move the objectives and problem statement under the introduction section.

5. Methodology: The authors did not develop their argument from the appropriate theory and explored models previously studied in the same area. However, the data is focused on the Indian context. The article represents primary data from the survey technique as the sample and methodology and relevant to present the proposed theme's context. However, the empirical sample was fair enough to illustrate significant empirical results of this paper, and the methods employed are appropriate. In addition, there are major concerns with sampling design and data nature.

• (i) What is the population (Sampling frame, total population, etc.)?
• (ii) Why specifically were Odisha (a state of India) selected for this study?
• (iii) Regarding the methodology, more details and justification of why simple regression analysis is used?
• (iv) Author (s) did not define the data collection and sampling in a clear way.
• (v) Why you used a five-point Likert? Why not a seven-point Likert scale?
• (vi) In p14, although it is the result section, the researchers should avoid using the personal pronoun ‘we’. However, the researchers used ‘we’ in several places in this paper. For example, the researchers said, “we test the effect” It prefers to say this paper/study had tested.

All the important issues are handled and edited accordingly. The authors followed the footstep of other researchers to prepare scale in the behavioural finance study.

6. Results: The analysis is clearly provided to tie up with the findings.

• The author should provide complete statistical analysis, i.e., skewness and kurtosis.
• There is a need for improvement in reporting results such as; the author should report [Beta value OR standard error (S.E) with significance level OR t-value; i.e., (β= xxx. P<0.01) OR (S. E= xxx, t > xxx). However, it could be more effective if the author presents significant results with bold and asterisk (*).

Important finding are made bold and asterisk symbols are also placed. The description statistics is huge to display for a set of 55 questions. The author has tested the normality part. The other assumptions of generalisation was stated like scale reliability, data adequacy, multicollearnity and heteroskedasticity in the manuscripts.

7. Discussion and findings: As results are clearly provided. However, there is no substantial discussion on results.

• Author(s) should discuss the limitations of this study and future research direction in a constructive way. Hence, authors should write in prices and in a constructive way under a subsection of discussion.
• Author(s) did not discuss the theoretical and practical contribution of this study. The author (s) should discuss this study's theoretical and practical contribution in the separate subsection under discussion for more clarity.

The limitation and scope of research has been placed in the manuscript as recommended.

The practicability has been illustrated in the edited manuscripts.

8- Conclusion: The author should provide concluding statements rather than repetitive statements in the conclusion portion.

Repetitive words has been changed and better meaningful content has been placed.

9. Citation and End References

• The in-text citations and end list of references do not sufficiently correspond. Please cross-check and correct citations and references throughout the paper.
• The author did cite the latest literature relevant to the target issue in this paper. The reviewer found that the author has cited only nine (9) recently published papers in this article (Most of the cited articles ten years old). As a suggestion, the author must cite new articles (latest literature) to make holistic discussion and sturdy paper with high readability

New citations and references made in this regard to suffice my work.

10. Quality of Communication: The paper needs further proofreading. I have tried to read the paper constructively, but I felt it suffers from poor writing. I, therefore, request the author to pass the manuscript for professional proofreading. I suggest that a more careful investigation of prior literature can make this paper distinguishable. Linking this article with prior studies does not seem sufficient, which weakens the justification of incremental contributions.

Proofreading has been done before sending the edited manuscript.

Suggested Revisions

• There is a 22% Similarity index. The authors must reduce it below 15%

Kindly test the similarity index without the references as the reference can be same with other literatures.

• The manuscript needs a professional proofreading.

Done for the purpose

• Abstract revision (complete / Major concern)

Major revision made as per the recommendation.

• Sampling and Data (Need to explain in detail / Major concern)

Explained as required

• Introduction Section (Please re-write holistically)

Edited as per the instruction.

• There is a need to discuss the theoretical and practical contributions of this study in separate subsections.

Practical contribution has been added

• The conclusion section needs to revise

Conclusion has been revised and changed.

Author Response File: Author Response.docx

Reviewer 3 Report

The revision was successful but there are some points that the authors should reconsider.

1. There are two papers mentioned in the text but there are not in references. This is the Kim (2012) on p. 6, l. 236, and Cochran (1963) on p. 7, l. 289.
2. In the references the Aydemir and Aren (2017) is written as DincAydemir and Aren (2017).
3. There are references with three of more authors that are not mentions in short form 'et al.' Also there are references with initial together with the family name.
4. The unique mathematical equation on p. 7, l. 292, does not meet the standards for the mathematical formulas.

Author Response

Point1. There are two papers mentioned in the text but there are not in references. This is the Kim (2012) on p. 6, l. 236, and Cochran (1963) on p. 7, l. 289.

Response -1 Added to the reference

Point2. In the references the Aydemir and Aren (2017) is written as DincAydemir and Aren (2017).

Response-2 Changes has been made

Point3. There are references with three of more authors that are not mentions in short form 'et al.' Also there are references with initial together with the family name.

Response-3 Reference has been made through Mendeley and followed the APA6 pattern. In the reference the authors have allowed more than 3 author's name but in the citation the et. al. is used.

Point-4 The unique mathematical equation on p. 7, l. 292, does not meet the standards for the mathematical formulas.

Response-4 This is the formula based on Cochran (1963). The standard is however maintained in the new submission.

Round 3

Reviewer 2 Report

Dear Authors, 

Thank you for incorporating the suggested changes. However, I asked to add a sub-section under the Discussion Section.

• The author (s) did not discuss the theoretical and practical contribution of this study. The author (s) should discuss this study's theoretical and practical contribution in the separate subsection under discussion for more clarity.
• The author (s) should discuss the limitations of this study and future research direction in a constructive way. Hence, authors should write in prices and in a constructive way under a subsection of discussion.

Author Response

Point 1. The author (s) did not discuss the theoretical and practical contribution of this study. The author (s) should discuss this study's theoretical and practical contribution in the separate subsection under discussion for more clarity.

Response 1. Theoretical and practical contribution of this study is placed in the discussion part as subsection as specified

Point 2. The author (s) should discuss the limitations of this study and future research direction in a constructive way. Hence, authors should write in prices and in a constructive way under a subsection of discussion.

Response 2. limitations of this study and future research direction are placed in subsection under discussion as specified. 

This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.