Behavioral Finance

2019 ◽  
Author(s):  
H. Kent Baker ◽  
Greg Filbeck ◽  
John R. Nofsinger
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Social Factors ◽  
Cognitive Biases ◽  
Risk Tolerance ◽  
Market Anomalies ◽  
The World ◽  
Financial Decision ◽  
The Common ◽  
And Gender

People tend to be penny wise and pound foolish and cry over spilt milk, even though we are taught to do neither. Focusing on the present at the expense of the future and basing decisions on lost value are two mistakes common to decision-making that are particularly costly in the world of finance. Behavioral Finance: What Everyone Needs to KnowR provides an overview of common shortcuts and mistakes people make in managing their finances. It covers the common cognitive biases or errors that occur when people are collecting, processing, and interpreting information. These include emotional biases and the influence of social factors, from culture to the behavior of one’s peers. These effects vary during one’s life, reflecting differences in due to age, experience, and gender. Among the questions to be addressed are: How did the financial crisis of 2007-2008 spur understanding human behavior? What are market anomalies and how do they relate to behavioral biases? What role does overconfidence play in financial decision- making? And how does getting older affect risk tolerance?

Behavioral mediators of financial decision making – a state-of-art literature review

2018 ◽  
Vol 10 (1) ◽  
pp. 2-41 ◽  
Author(s):  
Rupali Misra Nigam ◽  
Sumita Srivastava ◽  
Devinder Kumar Banwet
Keyword(s):  
Decision Making ◽  
Literature Review ◽  
Behavioral Finance ◽  
Market Anomalies ◽  
Content Type ◽  
Financial Decision Making ◽  
Quantitative Studies ◽  
Financial Decision ◽  
Future Work ◽  
Stock Market Anomalies

Purpose The purpose of this paper is to review the insights provided by behavioral finance studies conducted in the last decade (2006-2015) examining behavioral variables in financial decision making. Design/methodology/approach The literature review assesses 623 qualitative and quantitative studies published in various international refereed journals and identifies possible scope of future work. Findings The paper identifies stock market anomalies which contradict rational agents of modern portfolio theory at an aggregate level and behavioral mediators, influencing the financial decision making at an investor level. The paper also attempts to classify different dimensions of risk as professed by the investor. Originality/value The authors synthesize the contribution made by behavioral finance studies in extending the knowledge of financial market and investor behavior.

scholarly journals Capital structure construct: a new approach to behavioral finance

2019 ◽  
Vol 16 (4) ◽  
pp. 86-97
Author(s):  
Jose Anselmo Perez Reyes ◽  
Montserrat Reyna Miranda ◽  
Jorge Vera-Martínez
Keyword(s):  
Capital Structure ◽  
Behavioral Finance ◽  
Latent Variables ◽  
Cognitive Biases ◽  
Decision Makers ◽  
Financial Behavior ◽  
Chief Financial Officers ◽  
New Approach ◽  
Financial Decision ◽  
Construct Dimensions

Within the framework of behavioral finance, this research shows that financial behavior can be assessed as a cognitive construct. Using certain variables, a multidimensional “cognitive finance” construct can thus be established. Through a technological – psychometric type design with descriptive data analysis, a factor analysis is presented to determine which latent variables tend to charge significantly in order to assess the validity of the dimensions comprising the construct of capital structure and explore its dimensions in relation to financial theory. A 44-item questionnaire is adapted and applied to a sample of chief financial officers from diverse public and nonpublic companies in Mexico. The analysis reveals the existence of four construct dimensions consistent with corporate financial theory. The model helps to explain how decision-makers react to uncertainty and environmental conditions, directly affecting the valuation of firm’s losses or earnings. As evidenced by the results, application of the Item Response Theory to the field of behavioral finance could open up new avenues to the study of cognitive biases, involved in the financial decision-making process. Thus, this implies that behavioral finance can also be treated as “cognitive finance.”

scholarly journals Decision and Gender issue – A correlation study

2020 ◽  
Author(s):  
AMAL SANKAR MUKHERJEE
Keyword(s):  
Decision Making ◽  
Gender Issue ◽  
Correlation Study ◽  
Stress And Strain ◽  
Decision Making Capacity ◽  
Adolescence Period ◽  
The Common ◽  
Behavioral States ◽  
And Gender ◽  
The Right

<p><i>Stress and strain are the common symptoms of the adolescence period. Naturally, their lives are full of emotion and they cannot consider all the possible alternatives to be taken as their decision making. Behavioral states and emotional attitudes always obstruct adolescent learners to take proper decision at the right time. The investigator in this study has analyzed the responses of adolescent learners from rural schools for their irresolution in decision making based on various emotional changes. The study concludes that emotion largely affects the decision-making capacity of adolescent learners’, especially female learners.</i></p>

scholarly journals The determinants of risk tolerance: A behavioural analysis

2012 ◽  
Vol 9 (2) ◽  
pp. 476-485 ◽  
Author(s):  
Everton Anger Cavalheiro ◽  
Kelmara Mendes Vieira ◽  
Paulo Sérgio Ceretta
Keyword(s):  
Decision Making ◽  
Regression Analysis ◽  
Prospect Theory ◽  
Risk Tolerance ◽  
Financial Decision Making ◽  
Behavioural Analysis ◽  
Determining Factors ◽  
Financial Decision ◽  
Santa Maria ◽  
Level Of Risk

The traditional perspective of financial theory suggests an implicit rationality on decision making. Historically, researches have revolved around demographic, social and economic heuristics, thus neglecting the emotional, cognitive and behavioral suppositions, related to financial decision making. In this sense, this study aims to evaluate which are the determining factors for risk tolerance. So, we carried out a survey on 815 individuals residing in Santa Maria, Julio de Castilhos and Cruz Alta, Brazil. Afterwards, we performed a CFA and, eventually, a regression analysis. Generally and consistently, the suppositions for rationality were refuted, though consistent to the Prospect Theory, validating the numerous studies that demonstrate the violation of the rationality suppositions. The heuristics which are traditionally used in order to determine the level of risk tolerance have not shown to be significant in this research. The cognitive, emotional and behavioral dimensions of decision making have shown to be significant.

scholarly journals A scoping review on the influencing factors and development process of professional identity among nursing students and nurses

2019 ◽  
Author(s):  
aimei mao ◽  
Su-e Lu ◽  
Yan Lin ◽  
Miao He
Keyword(s):  
Nursing Students ◽  
Professional Identity ◽  
Influencing Factors ◽  
Scoping Review ◽  
Social Factors ◽  
Development Process ◽  
Personal Factors ◽  
The Social ◽  
The World ◽  
The Common

Abstract Background Professional identity is related to individuals’ professional commitment. It has been a hot topic in the nursing science because of the common problem of nursing workforce shortage around the world. Professional identity is culturally shaped, but few scholars have systematically examined its developmental characteristics in a specific culture. The aim of the scoping review is to get comprehensive knowledge on the influencing factors and development process of the professional identity among nursing students and nurses in mainland China Methods A scoping review was conducted. The most common Chinese databases, China National Knowledge Infrastructure and Wanfang Data, were searched for publications in Chinese. The EBSCOhost and ProQuest dissertation and thesis global were searched for publications in English. After screening the title and abstract of the articles in the first round and the full-text in the second round, 53 articles were included for analysis. Results The influencing factors to professional identity development in nursing could be grouped into three dimensions: personal factors at micro dimension, familier factors and institutional factors at medium dimension, and social factors at macro dimension. The social factors tended to negatively affect professional identity while the factors at the other two dimensions exerted influence in different directions. A framework was established based on professional identity levels in different career stages of nurses to depict the continuum and dynamic nature of development process. Conclusions Development of professional identity in nursing is a dynamic process shaped by multidimensional factors. The biggest obstacles to the development lie in the social factors. Changes in policy should be made to reverse the nursing profession stereotype of being a passive role to medicine. As some obstacles and challenges faced by nursing are shared by nurses around the world, international cooperation is needed to address the common obstacles and challenges. Keywords: China; development process; influencing factors; nurses; nursing students; professional identity; scoping review

scholarly journals Are Movers More Egalitarian than Stayers? An Intergenerational Perspective on Intra-Household Financial Decision-Making

2018 ◽  
Vol 54 (1) ◽  
pp. 120-146
Author(s):  
Şebnem Eroğlu
Keyword(s):  
Decision Making ◽  
International Migration ◽  
Personal Data ◽  
Married Couples ◽  
Gender Ideologies ◽  
Household Decision ◽  
Financial Decision Making ◽  
Married Individuals ◽  
Financial Decision ◽  
And Gender

This study seeks to investigate the role of international migration in shaping the financial decision-making behaviors of married couples through a comparison of three generations of Turkish migrants to Europe (i.e., movers) with their counterparts who remained in Turkey (i.e., stayers). The data are drawn from a subset of personal data from the 2000 Families Survey, involving 4,215 interviews performed randomly with married individuals nested within 1,713 families. The results suggest that international migration increases the tendency for spouses to jointly decide on their finances by (1) weakening the intergenerational transmission of traditional financial decision-making behaviors and gender ideologies and (2) enabling more intense acculturation of younger generations within “less patriarchal” contexts. With its unique, intergenerational, and multisite perspective, the study provides particular insight into the understudied relationship between migration and intra-household decision-making and its benefits for gender equality.

PENGARUH FINANCIAL ATTITUDE DAN FINANCIAL KNOWLEDGE TERHADAP KEPUTUSAN KEUANGAN PADA PEMILIK USAHA KECIL DAN MENENGAH (UKM) DI PULAU LOMBOK: SUATU PERSPEKTIF BEHAVIORAL FINANCE

2020 ◽  
Vol 6 (2) ◽  
pp. 166-178
Author(s):  
Siti Aisyah Hidayati ◽  
Sri Wahyulina ◽  
Embun Suryani
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Financial Management ◽  
Sampling Technique ◽  
Provincial Government ◽  
Financial Knowledge ◽  
Financial Attitudes ◽  
Financial Decisions ◽  
Financial Decision Making ◽  
Financial Decision

This study aims to analyze the effect of Financial Attitude and Financial Knowledge on financial decisions on Small and Medium Business Owners (UKM) on Lombok Island. The theoretical contribution of this research is expected to contribute to science and the development of behavioral finance theories related to financial decision making in Small and Medium Enterprises (SMEs). It is also expected that behavioral finance will be the subject of financial management courses. Furthermore, the practical contribution of this research is expected to provide input, suggestions and recommendations to the policy maker of the NTB Provincial Government in making policies related to the development of SMEs. This research is a quantitative approach based research, with the type of explanatory research. The study population is all SMEs in the island of Lombok. The sampling technique is done by using Non probability sampling, which uses judgment sampling, which is choosing SMEs that are engaged in the pottery industry and have already exported. From the existing population, there are 35 (thirty-five) SMEs that can be taken as samples. Respondents in this study are the owners of each of these UKM. Data collection techniques used in this study were using a questionnaire. To achieve research objectives and hypothesis testing, the data obtained will be processed according to needs using GSCA (Generalized Structured Component Analysis) statistical tools.The results showed that Financial Attitudes had a positive and significant effect on financial decision making by SME owners and owners. This means that the better the Financial Attitudes owned by SME owners, the bolder they are in making financial decisions. Financial Knowledge has a positive and significant impact on financial decision making by SME owners and owners. This means that the better the Financial Knowledge possessed by SME owners, the bolder the financial decisions will be

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