scholarly journals Impact of Demographics and Perceptions of Investors on Investment Avenues

2017 ◽  
Vol 6 (2) ◽  
pp. 198 ◽  
Author(s):  
Ganga Bhavani ◽  
Khyati Shetty Dutta
Keyword(s):  
Behavioral Finance ◽  
Investment Decision ◽  
Vital Role ◽  
Financial Advisors ◽  
Demographic Profiles ◽  
Wealth Management ◽  
Bank Deposits ◽  
Investment Choice ◽  
Investment Decision Making ◽  
Gender Education

The primary purpose of this study is to investigate how investment choice gets affected by the demographics and perceptions of the investor. Investor’s behavior is influenced by many factors at the time of investment decision making. Demographic profile and perceptions play an important role to select a particular choice of investment. This paper helps to enhance the knowledge on different investment avenues like bank deposits, life insurance policies, mutual funds and equity which in turn will be highly useful to the financial advisors as it will help them advise their clients regarding these avenues with respect to their demographic profiles. The study also highlights the evidences that the investment choice depends on and is affected by the demographic variables and perceptions. However, the results of this research shows that the most investors have little knowledge on the investment avenues for their investments. Mann Whiteny ‘U’ test, Kruskal- Wallis has been conducted to test the hypotheses with the help of SPSS. Logistic regression results of this study proves that investors’ age, gender, education and occupation significantly influences the selection of investment avenues. Wealth Management professionals emphasizes that customer behavior and psychology play a vital role in successfully building and sustaining a wealth management relationship. Behavioral finance is new emerging science which focuses on understanding the psychology effects on investment decision. 

scholarly journals SOCIO-ECONOMIC, TRADING SOPHISTICATION AND SELF-REFLECTION ON INVESTORS’ HERDING BIAS: EVIDENCE FROM COLOMBO STOCK EXCHANGE

2020 ◽  
Vol 6 (2) ◽  
pp. 128-138
Author(s):  
B.A.H Kawshala ◽  
P. A. N. S Anuradha ◽  
Mohamed M. Shamil
Keyword(s):  
Behavioral Finance ◽  
Stock Exchange ◽  
Investment Decision ◽  
Sampling Technique ◽  
Individual Investors ◽  
Herd Behavior ◽  
Financial Advisors ◽  
Financial Decisions ◽  
Self Reflection ◽  
Investment Decision Making

Purpose of the study: Individual investor’s behavior is extensively influenced by biases that are highlighted in the growing discipline of behavioral finance. The present study sought to investigate the influence of socio-economic factors (i.e., investors’ age, gender, education, profession, and income), trading sophistication factors (i.e., trading experience and trading frequency), and self-reflection on herding bias in investment decision-making in Colombo Stock Exchange (CSE). Methodology: The study adopted descriptive and explanatory research designs. It was a census of all 243 individual investors registered with CSE as of September 2020. Sampling was done applying proportionate stratified random sampling technique and data was gathered using self-administered semi-structured questionnaires. The analysis was conducted using means, standard deviations, and regression. Main Findings: The results show that herd behavior is mostly seen among females, having less educational qualifications, who are engaged in the finance field professions, those who are with a very low monthly income, low experience, and who trade less frequently. Self-reflection can be seen in herding bias. On the other hand, age does not impact on herding bias of investors. Applications of this study: This study will be helpful to financial intermediaries to advise their clients. Moreover, the results of the present study facilitate individual investors to realize their herding bias by its’ determinants in the pursuit of making sensible and effective financial decisions. Novelty/Originality of this study: This study gives a unique insight into the investors’ profile corresponding to herding bias under consideration. It not only updates the evidence on herding bias but also highlights which factors are the most influential on herding bias in the Sri Lankan context. With the peculiar scenario in Sri Lanka, this paper contributed to the behavioral finance field as a reference for individual investors and financial advisors.

Do investors exhibit behavioral biases in investment decision making? A systematic review

2018 ◽  
Vol 10 (2) ◽  
pp. 210-251 ◽  
Author(s):  
Syed Aliya Zahera ◽  
Rohit Bansal
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Institutional Investors ◽  
Investment Decision ◽  
Research Work ◽  
Investment Decisions ◽  
Financial Advisors ◽  
Content Type ◽  
Behavioral Biases ◽  
Investment Decision Making

Purpose The purpose of this paper is to study and describe several biases in investment decision-making through the review of research articles in the area of behavioral finance. It also includes some of the analytical and foundational work and how this has progressed over the years to make behavioral finance an established and specific area of study. The study includes behavioral patterns of individual investors, institutional investors and financial advisors. Design/methodology/approach The research papers are analyzed on the basis of searching the keywords related to behavioral finance on various published journals, conference proceedings, working papers and some other published books. These papers are collected over a period of year’s right from the time when the most introductory paper was published (1979) that contributed this area a basic foundation till the most recent papers (2016). These articles are segregated into biases wise, year-wise, country-wise and author wise. All research tools that have been used by authors related to primary and secondary data have also been included into our table. Findings A new era of understanding of human emotions, behavior and sentiments has been started which was earlier dominated by the study of financial markets. Moreover, this area is not only attracting the, attention of academicians but also of the various corporates, financial intermediaries and entrepreneurs thus adding to its importance. The study is more inclined toward the study of individual and institutional investors and financial advisors’ investors but the behavior of intermediaries through which some of them invest should be focused upon, narrowing down population into various variables, targeting the expanding economies to reap some unexplained theories. This study has identified 17 different types of biases and also summarized in the form of tables. Research limitations/implications The study is based on some of the most recent findings to have a quick overview of the latest work carried out in this area. So far very few extensive review papers have been published to highlight the research work in the area of behavioral finance. This study will be helpful for new researches in this field and to identify the areas where possible work can be done. Practical implications Practical implication of the research is that companies, policymakers and issuers of securities can watch out of investors’ interest before issuing securities into the market. Social implications Under the Social Implication, investors can recognize several behavioral biases, take sound investment decisions and can also minimize their risk. Originality/value The essence of this paper is the identification of 17 types of biases and the literature related to them. The study is based on both, the literature on investment decisions and the biases in investment decision-making. Such study is less prevalent in the developing country like India. This paper does not only focus on the basic principles of behavioral finance but also explain some emerging concepts and theories of behavioral finance. Thus, the paper generates interest in the readers to find the solutions to minimize the effect of biases in decision-making.

scholarly journals A Study on The Behavioural Aspects of Retail Investors for Investment Decision Making in Telangana State

2016 ◽  
Vol 1 (1) ◽  
pp. 51-59
Author(s):  
Jhansi Rani Boda ◽  
G. Sunitha ◽  
Parag Ray
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Behavior ◽  
Behavioral Patterns ◽  
Behavioral Factors ◽  
Investment Decision Making ◽  
Retail Investors ◽  
Telangana State ◽  
Behavioural Aspects

Objective - Investment is the commitment of funds which have been saved from the current consumption with an expectation of favorable future returns. Investment behavior is concerned with choices made about the purchase of a significant number of securities for an individual or institutional account. Individual investment behavior is relatively a new area of research in behavioral finance. This study aims to identify the various behavioral patterns of retail investors and their investment decision making in the newly formed Telangana state of India. Methodology/Technique - Data were collected from a sample of 200 retail investors via a structured questionnaire. Factor analysis was then conducted to critically identify the behavioral patterns of the retail investors. Findings - The findings of this study indicate that the two behavioral factors of Heuristics and Prospect have significant impact on the investment decision making attitudes of the retail investors. Novelty - As a newly formed state in India, the Telangana state provides potential investment opportunities for retail as well as institutional investors. It is thus, highly imperative to explore how retail investors make investment decisions especially in the newly formed Telangana State in India Type of Paper: Empirical Keywords: Behavioral Factors; Behavioral Finance; Investment Behavior; Investment Decision Making; Retail Investor.

Effect of Disposition Effect on Investment Decision Making in Property Market in Plateau State, Nigeria

2019 ◽  
pp. 83-98
Author(s):  
Dashol Ishaya Usman ◽  
Mary Pam
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Primary Data ◽  
Property Market ◽  
Financial Decisions ◽  
Descriptive Research ◽  
Investment Decision Making ◽  
Plateau State

The purpose of the chapter was to establish the effect of disposition on investment decision making in property market in Plateau State, Nigeria. Descriptive research design was used in the study. Primary data was collected using standard questionnaires with both closed and open-ended questions. The regression analysis results confirmed that there was a significant positive linear relationship between disposition and investor investment decision making in property market in Plateau State in Nigeria. The study concluded that disposition effects bias does not alter rationality in investment decision making. Disposition affected investment decisions. The main recommendation for investors is to make constant attempts to increase their awareness on behavioral finance by educating themselves on the field. Studying about the biases and reflecting on their decisions are likely to help achieve better self-understanding of the extent and manner to which they are influenced by emotions while making financial decisions under uncertainty.

Evaluation of behavioral biases affecting investment decision making of individual equity investors by fuzzy analytic hierarchy process

2019 ◽  
Vol 12 (3) ◽  
pp. 297-314 ◽  
Author(s):  
Jinesh Jain ◽  
Nidhi Walia ◽  
Sanjay Gupta
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Analytic Hierarchy ◽  
Content Type ◽  
Behavioral Biases ◽  
Investment Decision Making ◽  
Overconfidence Bias ◽  
Hierarchy Process

Purpose Research in the area of behavioral finance has demonstrated that investors exhibit irrational behavior while making investment decisions. Investor behavior usually deviates from logic and reason, and consequently, investors exhibit various behavioral biases which impact their investment decisions. The purpose of this paper is to rank the behavioral biases influencing the investment decision making of individual equity investors from the state of Punjab, India. This research would provide valuable insight into the different behavioral biases to investors and other participants of the capital market and help them in improving investment decisions. Design/methodology/approach The research is conducted on the individual equity investors of Punjab, India. Fuzzy analytic hierarchy process was applied to rank the factors influencing the decision making of individual equity investors of Punjab. The primary factors considered for the study are overconfidence bias, representative bias, anchoring bias, availability bias, regret aversion bias, loss aversion bias, mental accounting bias and herding bias. Findings The three most influential criteria were herding bias, loss aversion bias and overconfidence bias. The five most influential sub-criteria were “I readily sell shares that have increased in value (C61),” “News about the company (Newspapers, TV and magazines) affects my investment decision (C84),” “I invest each element of my investment portfolio separately (C71)” and “I usually hold loosing stock for long time, expecting trend reversal (C52).” Research limitations/implications Although sample survey conducted in the present study was based on a limited sample selected from a particular area that truly represented the total population, it is considered as the limitation of this study. Practical implications The outcome of this research provides investors with a better understanding of behavioral biases that influence their decision making. This study provides them a guideline on different behavioral biases that they should consider while making investment decisions. Originality/value The research model is based on the available literature on behavioral finance and the research results and findings would add value to the existing knowledge base.

Role of Financial Statement in Investment Decision Making Process

2020 ◽  
Vol 9 (1) ◽  
pp. 105-108
Author(s):  
Suraj Bhujel
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Financial Statements ◽  
Vital Role ◽  
Financial Statement ◽  
Quality Information ◽  
Decision Making Process ◽  
Investment Decision Making

It is believed that financial statements are the key documents for any organizations for the investment decision making. Investment decision making depends upon the quality information obtained by the various sources and it is concluded in this research which is based on the findings that financial statement plays a vital role in investment decision making and recommends that no investment decision should be taken without the consideration of a company’s financial statements.

Relationship between Behavior Bias and Investment Decision: A Comprehensive Literature Review

2019 ◽  
Vol 118 (12) ◽  
pp. 92-104
Author(s):  
Amit Agrawal ◽  
Dr. Somesh Dhamija
Keyword(s):  
Behavioral Finance ◽  
Investment Decision ◽  
Critical Factor ◽  
Decision Makers ◽  
Brain Science ◽  
Investment Decision Making ◽  
Leadership Process ◽  
Recognition And Response ◽  
Historical Past ◽  
The Brain

For investment-related decisions, the foremost critical factor is the speculator's recognition and response. For a private speculator, basic leadership process could be viewed as a constant process which has significant impact of the brain science while making purchase choices. In traditional financial theory, the investors are likely to be logical decision makers going along with the expected energy theory. Behavioral finance, in contrary to this, criticizes the logical viewpoint and it is argued that the investors have a tendency to deviate from rationality when they make purchase choices. Several behavioral biases that could happen in investment decision making over the historical past have been reviewed in this research paper.

Differences in Behavioral Biases in Investment Decision Making: Gender and Occupation Perspective

2015 ◽  
Vol 16 (1) ◽  
pp. 13-35
Author(s):  
Shailesh Rastogi
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Decision Making Process ◽  
Buying Behavior ◽  
Behavioral Biases ◽  
The People ◽  
Investment Decision Making ◽  
Behavioral Aspects ◽  
Finance Theory

Investments and Investment decision making come a long way in last few decades. The practical deviation from the established norms of conventional finance made the people know that the investors??buying behavior cannot be understood only by conventional finance theories. Studies strongly support the presence of behavioral aspects in the investment decision making process and behavioral finance provides solution to many-a-problems hitherto not answered appropriately by the conventional finance theory. Moreover, it was also propounded that the behavioral biases vary across gender and occupation of the investors. This study provides evidences for the existence of biases and also provides with the evidences that behavioral biases are not affected by the combined categories of gender and occupation.

Small and Medium Enterprise Sector in Mauritius: Its Evolution and Growth with Special Reference to Investment Criteria

1997 ◽  
Vol 1 (1) ◽  
pp. 1-13
Author(s):  
S. Matadeen
Keyword(s):  
Investment Decision ◽  
Vital Role ◽  
Government Support ◽  
Decision Making Process ◽  
Sectoral Analysis ◽  
Investment Decision Making ◽  
Soft Term ◽  
Investment Structure ◽  
Medium Enterprise ◽  
Two Sectors

SMEs play a vital role in the process of industrialisation in developing countries because of their ability to adapt to the changing environment. In view of the multiple constraints and complexity of investment decision-making process, a study was undertaken to analyse the investment structure/practices of SMEs in Mauritius. The results of the study reveal that of the SMEs with an investment of over Rs. 1 million, 76% are corporates, and of those with an investment of more than Rs. 3 million, 90% are companies. Similarly irrespective of their year of formation, 64% of SMEs in the corporate sector are willing to re-invest more than Rs. 1m in plant and machinery, but even government incentives like raising the qualifying investment limit and duty concessions have not encouraged SMEs to invest over Rs. 3m in plant and machinery. A sectoral analysis reveal that SMEs in the metal product and workshops were willing to reinvest but those in the textile product group were not. As far as sectoral investment since 1990 is concerned, the two sectors which have witnessed increased investment in Plant and Machinery are food and beverages and chemical, rubber and plastics. The growth and modernisation of SMEs warrant considerable government support in the form of tax and duty concessions and soft-term loans.

scholarly journals Impact of Behavioral Factors in Making Investment Decisions and Performance: Evidence from Pakistan Stock Exchange

Market Forces ◽  
2021 ◽  
Vol 16 (1) ◽  
pp. 22
Author(s):  
Muhammad Rehan ◽  
Jahanzaib Alvi ◽  
Lubna Javed ◽  
Baber Saleem
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Individual Investors ◽  
Behavioral Factors ◽  
Factors Affecting ◽  
Investment Decision Making ◽  
The Impact

Market irregularities and irrational behavior triggered investor’s changes in the stock market, and this has led to an investigation into the impact of various behavioral biases and factors affecting decision-making for individual investors. The quality of individual investor behavior in making stock investment decisions is very important to be understood as a reference of the movement of the capital market. This study investigated the role of behavioral finance and investor psychology in investment decision-making at the Pakistan Stock Exchange (PSE). Using a sample of 147 individual investors, the study established that behavioral factors such as Herding, Heuristic, Market and Prospect that affected the decisions of the investors operating at the Pakistan Stock Exchange (PSE). As there are a few studies in Pakistan related to behavioral finance, so this study mainly contributes to the field of behavioral finance in Pakistan. This study focusses on existing theories of behavioral finance which led to develop the hypothesis. The result of the analysis is that the four variables have greatly influenced the investment decision and return on investment. All behavioral variables have a significant impact on the decision-making process of investors, which led to the acceptance of all assumptions regarding the level of influence of behavioral factors in decision making for individual investors

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