Examining factors influencing investment in Digital Gold and Gold ETF using the PCA technique
-
DOIhttp://dx.doi.org/10.21511/imfi.20(2).2023.14
-
Article InfoVolume 20 2023, Issue #2, pp. 160-170
- 836 Views
-
353 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Digital Gold and Gold Exchange Traded Fund have emerged as an electronic option for investment in gold in India. The purpose of this study is to determine influential factors forming the perception and level of awareness of individuals toward investing in Digital Gold and Gold Exchange Traded Fund, and also analyze the relationship among these influential factors. Data for this quantitative analysis were obtained from a self-administered 5-point Likert questionnaire of 158 respondents who are individual investors investing in either Digital Gold or Gold Exchange Traded Fund to achieve the objectives of the study. Principal Component Analysis has been adapted as a dimension reduction technique to identify the factors impacting the decision of investing in Gold Exchange Traded Fund and Digital Gold. The factors that induce investors to invest in Digital Gold and Gold Exchange Traded Fund as identified in this study are conduciveness, security, and ease of accessibility. The factors that compel investors not to invest in Digital Gold and Gold ETFs are lack of contentment, operational challenges, lack of awareness, brokerage expenses, and infeasibility. The results disclosed that variables such as lack of satisfaction and lack of knowledge have higher factor loadings of 0.997, which indicates that investors are required to be more educated about the Digital Gold and Gold Exchange Traded Fund. Securities and Exchange Board of India, Reserve Bank of India and other regulatory authorities in India may consider regulation of Digital Gold so that it can be accepted as a trustworthy source of investment.
- Keywords
-
JEL Classification (Paper profile tab)C19, D14, E62, G11
-
References33
-
Tables6
-
Figures0
-
- Table 1. Total variance explained for investment in Digital Gold and Gold ETF
- Table 2. Rotated component matrixa for investment in Digital Gold and Gold ETF
- Table 3. Total variance explained for not investing in Digital Gold and Gold ETF
- Table 4. Rotated component matrixa for not investing in Digital Gold and Gold ETF
- Table 5. Factors and related items for investment in Digital Gold and Gold ETF
- Table 6. Factors and related items for not investing in Digital Gold and Gold ETF
-
- Ainia, Nadya Septi Nur, & Lutfi Lutfi. (2019). The influence of risk perception, risk tolerance, overconfidence, and loss aversion towards investment decision making. Journal of Economics, Business & Accountancy Ventura, 21, 401-13.
- Anand, R. G. (2017). A Comparative Study on Gold vs Gold ETF’s and an Analysis of Gold ETF’s as an Effective Investment Tool for Indian Retail Investors. International Journal of Management and Business Studies, 7(3), 26-34.
- Association of Mutual Funds in India. (n.d.). World investor Week Nov 22-28, 2021.
- Athma, P., & Suchitra, K. (2011). Gold ETFs: An emerging investment option. Asia Pacific Journal of Research in Business Management (APJRBM), 2, 66-78.
- Chaluvadi, S. (2022b). Digital Gold. Scripbox.
- Digital, E. N. (2021, September 2). Sebi mulls new norms for digital gold trades. Times Now.
- Economic Survey by RBI. (2023). GOI under Ministry of Finance.
- Eswara, M. (2015). An empirical study on performance of gold ETFs in India-post crash period. SSRN Electronic Journal.
- Ghosal, S. (2021, September 10). Digital gold sales hit after Sebi’s ban. The Economic Times.
- Godbole, S. S., & Sashidharan, G. (2019). Will employment effect gold buying? An Indian perspective. Theoretical Economics Letters, 09(05), 1225-1234.
- Hair, J. F. (1995). Multivariate Data Analysis (4th ed.). Prentice Hall, New Jersey.
- Hamza, Nasrullah, & Imtiaz Arif. (2019). Impact of Financial Literacy on Investment Decisions: The Mediating Effect of Big-Five Personality Traits Model. Market Forces College of Management Sciences, 14, 43-60.
- Haria, C. (2022, October 10). Gold etfs: A convenient way to invest in gold this diwali. Deccan Herald.
- Horn, J. L. (1965). A rationale and test for the number of factors in factor analysis. Psychometrika, 30(2), 179-185.
- Hundal, D. B. S. (2013). Herd behaviour and Gold Investment: A perceptual study of retail investors. IOSR Journal of Business and Management, 15(4), 63-69.
- Joy, S. (2020, April 9). Gold ETFs: What is Gold ETF? What are its advantages? The Times of India.
- Kumar, B. S., & Raj, G. R. (2019). Gold vs Gold Exchange Traded Funds: An Empirical Study in India. Economic Affairs, 64(4), 703-710.
- Latha, V., & Deepa, D. (2017). Investment in Indian Gold ETFs soaring. IOSR Journal of Business and Management, 19(5), (May. 2017), 14-17.
- Lawrence, C. (2003) Why Is Gold Different from Other Assets? An Empirical Investigation (Vol. 6). World Gold Council.
- Lopes, T. (2022, November 24). Timothy Lopes. Vinod Kothari Consultants.
- Moneycontrol News. (2020). Digital Gold becomes new war zone for PhonePe, Google, Paytm and Amazon in India. Moneycontrol.
- News. Official Launch of DGLD | MKS PAMP. (n.d.).
- Pompian, M. M. (2012). Behavioral finance and investor types: Managing behavior to make better investment decisions. John Wiley & Sons.
- RBI Report. (2017). Indian Household Finance.
- Ricciardi, V. (2008). The psychology of risk: The behavioral finance perspective.
- Robb, Cliff A., & Deanna L. Sharpe. (2009). Effect of Personal Financial Knowledge on College Students’ Credit Card Behavior. Journal of Financial Counseling and Planning, 40, 25-43.
- Shefrin, H., & Statman, M. (1994). Behavioral Capital Asset Pricing Theory. Journal of Financial and Quantitative Analysis, 29(3), 323-349.
- Standard, B. (2019, May 8). WGC nudges govt to enforce its norms for buyers and sellers of Digital Gold. Business Standard.
- Venkatachalam, G. (2015). A study on investors behaviour towards gold exchange traded funds in Indian stock market with special reference to Tamil Nadu. Indian Journal of Applied Research, 5, 253-256.
- Verma, N., Negi, Y. S., & Shukla, R. K. (2020). Household Investment Preferences for Gold and Gold Exchange Traded Funds (ETFs) in Himachal Pradesh, India International Journal on Emerging Technologies, 11(2), 322-331.
- World Gold Council. (2018). Gold Backed ETFs. Gold Hub.
- Yadav, R., (2020). Investing in digital gold? Know the risks and costs involved. Mint.
- Zwick, W. R., & Velicer, W. F. (1986). Comparison of five rules for determining the number of components to retain. Psychological Bulletin, 99(3), 432-442.