An Empirical Investigation of the Behavior of Investors in the Dubai Financial Market (DFM)

2021 ◽  
Vol 9 (1) ◽  
Author(s):  
Bashar Abu Khalaf ◽  
Sami Alajani
Keyword(s):  
Stock Market ◽  
Financial Market ◽  
Behavioral Finance ◽  
Empirical Investigation ◽  
Multiple Correspondence Analysis ◽  
Behavioral Biases ◽  
Emotional Factors ◽  
Low Levels ◽  
High Level ◽  
Influence Behavior

It has been a challenge to provide an explanation of the behavior of different investors in different markets. Behavioral finance tends to look at the psychological and emotional factors related to the stock market and may influence behavior of investor and the efficiency of the market. The aim of this study is to investigate the influence of psychological and emotional factors on the behavior of investors in the Dubai Financial Market. The importance of this empirical paper is developed through the essential step in investment management which is decision making. This study was conducted to provide an explanation of how factors related to behavioral finance may influence the Dubai Financial Market. The data for this study was collected through a questionnaire distributed to investors in the Dubai stock market and then were analyzed using the multiple correspondence analysis. This paper collected the response of 294 out of 500 questionnaires provided to Dubai investors. The results of the analysis showed that investors with a high level of education are associated with low levels of behavioral biases, and individuals who invest amounts up to 20,000 AED are subject to behavioral biases. Based on these results, it can be concluded that information in the market lead to market efficiency.

scholarly journals Behavioral finance and games: simulations in the academic environment

2017 ◽  
Vol 29 (77) ◽  
pp. 297-311 ◽  
Author(s):  
Eliana Marcia Martins Fittipaldi Torga ◽  
Francisco Vidal Barbosa ◽  
Alexandre de Pádua Carrieri ◽  
Bruno Pérez Ferreira ◽  
Márcia Hiromi Yoshimatsu
Keyword(s):  
Stock Market ◽  
Financial Market ◽  
Behavioral Finance ◽  
Social Cognitive ◽  
Financial Analysis ◽  
Participant Observation ◽  
Comprehensive Knowledge ◽  
Training Professionals ◽  
Emotional Aspects ◽  
The One

ABSTRACT The contribution from this study lies in its reflection on the factors that influence market efficiency, which requires a multidisciplinary view to analyze the intervening factors that impact results of the financial system. It also contributes by reflecting on the need for new approaches for training professionals who will go on to work in financial and related areas and preparing them by using different financial analysis techniques; by reflecting on the fact that analytical practices are influenced by social, cognitive, and emotional aspects, enabling the students to be better prepared to act in the financial market; by presenting various technical possibilities and providing more comprehensive knowledge to choose the one that best suits the object of analysis and their preferences; and by reflecting on different ways of perceiving investment opportunities and risk, which can be expanded on in other studies on the segmentation of clients according to their preferences in the investor market. The aim of this study was to analyze how social and psychological aspects influenced the decisions involved in simulated trading operations. The relevance lies in its discussion of the philosophical and epistemological position in finance, which suffers from a vision that only focuses on the rationality of means and does not explain the anomalies verified in the financial market. The study originated from the application of a company game simulating the work of stock market trading desk operators, applied in the Stock Market Operations course and using fundamental, technical, and graphical techniques. The population was intentional and made up of undergraduate and graduate students from one of the four best Brazilian federal universities. The data analysis was performed by analyzing the content of the questionnaires applied and the journal entries made during participant observation.

scholarly journals Misvaluation and behavioral bias in the Brazilian stock market

2019 ◽  
Vol 30 (79) ◽  
pp. 107-122
Author(s):  
José Bonifácio de Araújo Júnior ◽  
Otávio Ribeiro de Medeiros ◽  
Olavo Venturim Caldas ◽  
César Augusto Tibúrcio Silva
Keyword(s):  
Stock Market ◽  
Behavioral Finance ◽  
Time Window ◽  
Abnormal Returns ◽  
Investment Strategy ◽  
Short Term ◽  
Publicly Traded Companies ◽  
Behavioral Biases ◽  
Three Samples ◽  
Investment Portfolios

ABSTRACT The study sought to apply the model developed by Gokhale et al. (2015) to identify the existence of overreaction and behavioral biases in the Brazilian stock market and analyze its performance as an investment strategy on the São Paulo Stock, Commodities, and Futures Exchange (BM&FBOVESPA) in the short term and long term, as well as test its robustness with time window simulations. The impacts of behavioral finance on capital markets can affect economic decisions, perpetuate or increase asset pricing anomalies, and in more extreme and persistent situations contribute to the formation of bubbles that can compromise the entire financial system of a country. The study pioneers an innovative methodology in the Brazilian stock market for identifying behavioral biases and obtaining abnormal returns and higher returns than the Ibovespa. The research uses the model developed by Gokhale, Tremblay, and Tremblay (2015) in three samples with quotations data for Brazilian publicly-traded companies that compose the Ibovespa and IBrA in the period from 2005 to 2016. With the R statistical software, the Fundamental Valuation Index (FVI) was calculated for each sample share and each year. From the FVI index, the undervalued shares were identified, indicating that the sales price does not reflect their economic fundamentals, and portfolio simulations were carried out for investment over three months or the next year. The results indicate the possible existence of overreaction and behavioral biases in the Brazilian stock market, which lead to the possibility of higher abnormal returns than those of the Ibovespa. Similar to the US market, at the end of the 2006-2016 period simulated portfolios yielded more than 274%, while the Ibovespa yielded approximately 80%. The robustness tests attest to the effectiveness of the model. The various investment portfolios, simulated over different time horizons, yielded more than the Ibovespa on average. The study also confirmed the assumptions of Gokhale, Tremblay, and Tremblay (2015) regarding the model's inadequacy for short-term strategies.

The Impact of Air Pollution on the Stock Market in South Korea

2021 ◽  
Author(s):  
◽  
Seongcheol Paeng
Keyword(s):  
Air Pollution ◽  
Stock Market ◽  
South Korea ◽  
Financial Market ◽  
Behavioral Finance ◽  
Negative Impact ◽  
Impulse Response Function ◽  
Weather Factors ◽  
Momentum Strategy ◽  
The Impact

Recently, behavioral finance researchers have produced many articles about moods effect on financial market. Weather factors and sports sentiments have a significant impact on moods and then the moods affect financial market. Air pollution also has an effect on financial market. This paper's hypothesis is that air pollution has a meaningful negative impact on the stock market in South Korea. This paper uses the Granger Causality for checking the significances and the Vector Auto-Regression model and the Impulse Response Function for investigating its impact according to time. Furthermore, this paper uses the 2SLS method for resolving endogeneity problems and checking robustness. If the level of air pollution increases 100 ??/?3, then the stock return reduces 0.42 after one day, and then recovers. The effect is significant at the 1% level and similar with the 2SLS method. Finally, this paper introduces air pollution momentum strategy that maximizes the cumulative return and measures the key variable's performance.

Examining investors' sentiments, behavioral biases and investment decisions during COVID-19 in the emerging stock market: a case of Pakistan stock market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shagufta Parveen ◽  
Zoya Wajid Satti ◽  
Qazi Abdul Subhan ◽  
Nishat Riaz ◽  
Samreen Fahim Baber ◽  
...  
Keyword(s):  
Developing Countries ◽  
Stock Market ◽  
Behavioral Finance ◽  
Stock Markets ◽  
Investment Decisions ◽  
Equation Modeling ◽  
Disposition Effect ◽  
Content Type ◽  
Behavioral Biases ◽  
The Impact

PurposeThis study investigates the impact of the COVID-19 pandemic on investors' sentiments, behavioral biases and investment decisions in the Pakistan Stock Exchange (PSX).Design/methodology/approachThe authors have assessed investors' behaviors and sentiments and the stock market overreaction during COVID-19 using a questionnaire and collected data from 401 investors trading in the PSX.FindingsResults of structural equation modeling revealed that the COVID-19 pandemic affected investors' behaviors, investment decisions and trade volume. It created feelings of fear and uncertainty among market participants. Evidence suggests that behavioral heuristics and biases, including representative heuristic, anchoring heuristic, overconfidence bias and disposition effect, negatively influenced investors' decisions at the PSX.Research limitations/implicationsThis study will contribute to behavioral finance literature in the context of developing countries as it has revealed the impact of COVID-19 on the emerging stock market, and its results are generalizable to other emerging stock markets.Practical implicationsThe findings of this study will help academicians, researchers and policymakers of developing countries. Academicians can formulate new behavioral models that can depict the solutions of dealing with an uncertain situation like COVID-19. Policymakers like the Securities Exchange Commission and the PSX can formulate crisis management strategies based on behavioral finance concepts to cope with situations like COVID-19 in the future and help lessen investors' losses in the stock markets. The role of the Securities Exchange Commission is crucial as it regulates the financial markets. It can arrange workshops to educate investors to manage their decisions during crisis time and focus on the best use of irrational and rational decision-making at the same time using Lo (2004) adaptive market hypothesis.Originality/valueThe novelty of the paper is that the authors have introduced overconfidence and disposition effect as mediators that create a connection between representative and anchoring heuristics and investment decisions using primary data collected from investors (institutional and retail) to demonstrate the presence of psychological biases during COVID-19, and it has been done for the first time according to authors' knowledge. It is a contribution and addition to the behavioral finance literature in the context of developing countries' stock markets and their efficiency.

scholarly journals Certain aspects of current state of domestic financial market

2021 ◽  
Vol 11/3 (-) ◽  
pp. 8-12
Author(s):  
Maryna BORMOTOVA ◽  
Tetiana MASHOSHYNA ◽  
Olena TROINIKOVA
Keyword(s):  
Stock Market ◽  
Financial Market ◽  
Securities Market ◽  
Financial Resources ◽  
National Commission ◽  
Financial Instruments ◽  
Global Indices ◽  
Banking Institutions ◽  
High Level ◽  
Investment Process

Introduction. The financial market, as a combination of exchange and redistribution relations associated with the processes of purchase and sale of financial resources is a complex system that is an indicator of the development of the economy as a whole. In the context of global challenges, the development trends of the financial market and its components are expanding. The securities market today occupies an increasing segment of the financial market, despite the fact that it is under development. Recently, it is characterized by a high level of dynamism. And already now it has positive results for the participants. Purpose. A study of the securities market, the structure of its financial instruments and the circle of participants. Results. Modern financial processes are characterized by the emergence of new financial instruments and technologies, which expands and forms an alternative to the placement and attraction of financial resources outside of banking institutions and increases the circle of participants. An example is the emergence of Internet trading. Internet trading is a system of securities work that gives the investor access to exchange information, and also makes it possible to conclude transactions on the purchase and sale of securities on the exchange in real time using a special certified program installed on a personal computer. The expansion of the range of financial instruments that contribute to the increase of the circle of participants in the financial process in the stock market occurred at the expense of Bonds of Internal Government Loans of Ukraine, whose income rates are higher then bank. They became the first hryvnia instruments included in the global indices of debt securities MVIS (MV Index Solutions. Also in October this year, the National Commission on Securities and Stock Market decided to allow the circulation of foreign securities in Ukraine. As a result, today Ukrainian investors can use the opportunity to invest in 85 securities of foreign issuers. All this makes it possible to obtain additional financial resources for both individual (households) and collective entities (communities). Conclusion. Domestic government bonds are effective financial instruments for the majority of participants in the investment process in the stock market are the first hryvnia instruments to be included in the the global MVIS debt securities indices. There is also a tendency to expand the circle of participants and the structure of financial instruments of the Ukrainian stock market due to the possibility of purchasing state securities by territorial communities, as well as admission of foreign securities by the Cabinet of Ministers of Ukraine.

scholarly journals INVESTOR EXPERTISE AND THE RATIONALITY OF DECISION MAKING

2015 ◽  
Vol 1 (310) ◽  
Author(s):  
Marcin Rzeszutek ◽  
Monika Czerwonka ◽  
Magdalena Walczak
Keyword(s):  
Decision Making ◽  
Stock Market ◽  
Behavioral Finance ◽  
Point Of View ◽  
Decision Making Process ◽  
Exploratory Research ◽  
Behavioral Biases ◽  
Stock Market Investors

The aim of the paper is to is to explore the determinants of the rationality in decision making among polish stock market investors with different level of expertise with investing. Rationality in decision making was defined from the behavioral finance point of view and was operationalized as the frequency of some behavioral biases (see: the certainty effect) within decision making process. In particular, this study aims to investigate the degree of susceptibility the certainty effect among people of various levels of expertise with investing. As  there is still a lack of data studies in behavioral finance literature investigating the issues mentioned in this article (or existing results are ambiguous) we treated our study as an exploratory research.

scholarly journals AN EMPIRICAL STUDY OF INDIVIDUAL INVESTORS’ BEHAVIORAL BIASES IN THE VIETNAMESE STOCK MARKET

2012 ◽  
Vol 15 (1) ◽  
pp. 5-13
Author(s):  
Quan Duc Hoang Vuong ◽  
Phuc Quy Dao
Keyword(s):  
Stock Market ◽  
Behavioral Finance ◽  
Ambiguity Aversion ◽  
Self Control ◽  
Illusion Of Control ◽  
Individual Investors ◽  
Optimism Bias ◽  
Behavioral Biases ◽  
Average Value ◽  
Investment Experience

The study aims to determine individual investors’ behavioral biases at individual level in the Vietnamese stock market and investigate the relationships between mutual behavioral biases, between demographic variables and behavioral biases, between stock investment variables and behavioral biases. This is a quantitative research in behavioral finance with the survey conducted in forms of questionnaire. Each question is a problem which requires investors to make decision. The research finds out that there are specific behavioral biases which influence investors’ investment decisions. Furthermore, there are relationships between gender and illusion of control bias, gender and optimism bias, gender and self-control bias. We also realize relationships between average value per trading times and investment experience, average value per trading times and loss aversion bias, trading frequency and optimism bias, investment experience and optimism bias, monthly income and optimism, age and cognitive dissonance bias. Our findings confirm relationships between mutual behavioral biases mentioned in behavioral finance such as relationships between framing bias and mental accounting bias, illusion of control bias and overconfidence bias. Additionally, we find out relationships between ambiguity aversion bias and confirmation bias.

High world sugar prices: is Asia’s production cycle to blame?

2010 ◽  
pp. 169-173
Author(s):  
Martin Todd
Keyword(s):  
Supply Chain ◽  
Supply And Demand ◽  
Production Cycle ◽  
Low Levels ◽  
High Level ◽  
High World

The current high world sugar prices reflect a major imbalance between global supply and demand, which has reduced stocks to very low levels. Although it remains to be seen whether prices will rise much above current values, it is clear that the supply chain will remain stretched throughout 2010 and this will help to maintain prices at a high level.

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