Abhigyan

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Impact of Behavioral Biases on Investment Decision Making: Evidence from the Review of Literature


Affiliations
1 Research Scholar, Kousali Institute of Management Studies, Dharwad, Karnataka, India
2 Director, Kousali Institute of Management Studies, Dharwad, Karnataka, India
     

   Subscribe/Renew Journal


The objective of the present study is to explore the literature available on behavioural biases impacting investors’ decision-making. From the literature studied, the researcher observed that from 2010 onwards, there was an increasing interest in the research community to explore this emerging topic of behavioural finance. Hence past 11 years, from 2010 onwards, articles were considered for the study to understand the influence of biases on financial decision-making. The Systematic Review of Literature (SLR) method is used for the study. The present study facilitates the identification of the gap in the current body of knowledge, thereby guiding future research in behavioural finance. The literature of 32 papers proved the impact of behavioural biases like Overconfidence, Anchoring, Loss Aversion Availability Biases, etc., on investment decisions. A review of selected papers suggested the gaps in exploring the prominent factor among objective and subjective factors impacting investment decision-making among investors and its effect on choosing a particular investment avenue. The study would greatly help investors, financial advisors, and the government.

Keywords

Behavioral Finance, Behavioral Biases, Investment Decisions, Heuristics, Prospect Rules.
User
Subscription Login to verify subscription
Notifications
Font Size

  • Alquraan, T., Alqisie, A., & Shorafa, A. AI. (2016). Do behavioral finance factors influence stock investment decisions of individual investors? Evidences from Saudi Stock Market. American International Journal of Contemporary Research, 6(3), 159-169.

  • Antony, A., & Joseph, A. I. (2017). Influence of behavioural factors affecting investment decision—An AHP analysis. Metamorphosis, 16(2) 107–114.

  • Barandagh, M. I., & Hasanzadeh, M. (2013). Examining the impact of mental accounting on the investment decisions in the Tehran stock exchange. International Journal of Accounting Research, 1(5), 6-10.

  • Bashir, T. (2013). Impact of behavioral biases on investors decision making: Male vs female. IOSR Journal of Business and Management (IOSR-JBM), 10(3), 60-68.

  • Budhiraja, K., Raman, T. V., & Bhardwaj, G. N. (2018). Impact of behavioral finance in investment decision making. International Journal of Civil Engineering and Technology, 9(6), 1151-1157.

  • Caroline, P., Koorse, G., & S. Kavitha. (2018). A study in ARIYALUR panchayat union of financial behaviour (with specific reference to customers of IOB). International Journal of Research in Management, Economics and Commerce, 08(1), 31-39.

  • Chandani, A., Ratnalikar, V. A., Bhatia, A., & Mehta, M. (2020). An empirical study to analyze the human behavioral aspects on individual financial decisions based on Indian context. https://doi.org/10.1016/j.matpr.2020.09.655.

  • Chhapraa, I. U., Kashifa, M., Rehanb, R., & Baia, A. (2018). An empirical investigation of investor’s behavioral biases on financial decision making. Asian Journal of Empirical Research, 8(3), 99-109.

  • Charles, A., & Kasilingam, R. (2016). Impact of selected behavioural bias factors on investment decisions of equity investors. ICTACT Journal on Management Studies, 02(2), 297-311.

  • Dangi, M., & Kohli, B. (2018). Role of behavioral biases in investment decisions: A factor analysis. Indian Journal of Finance, 12(3), 43-57.

  • Dangol, J., & Manandhar, R. (2020). Impact of heuristics on investment decisions: The moderating role of locus of control. Journal of Business and Social Sciences Research, 5(1), 1-14.

  • Deshpande, S., & Svetina, M. (2011). Does local news matter to investors? Managerial Finance, 37(12), 1190-1212.

  • Goo, Y. J, Chen, D. H, Chang, S. H. S, & Yeh, C. F. (2010). A study of the disposition effect for individual investors in the Taiwan Stock Market. Emerging Markets Finance & Trade, 46(1), 108–119.

  • Isidore, R. R., & Christie, P. (2018). Investment behavior of secondary equity investors: An examination of the relationship among the biases. Indian Journal of Finance, 12(9), 7-10.

  • Jain, J., Walia, N., & Gupta, S. (2019). Evaluation of behavioral biases affecting investment decision making of individual equity investors by fuzzy analytic hierarchy process. Review of Behavioral Finance, 12(3), 297-314.

  • Kandpal, V., & Mehrotra, R. (2018). Role of behavioral finance in investment decision-A study of investment behavior in India. International Journal of Management Studies, V (4), 39-49.

  • Kumar, S., & Goyal, N. (2016). Evidence on rationality and behavioural biases in investment decision making. Qualitative Research in Financial Markets, 8(4), 270-287.

  • Madaan, G., & Singh, S. (2019). An analysis of behavioral biases in investment decision making. International Journal of Financial Research, 10(4), 55-67.

  • Mak, M. K. Y., & Ip, W.H. (2017). An exploratory study of investment behavior of investors. International Journal of Engineering Business Management, 9, 1-12.

  • Mehraj, A. (2021). Impact of behavior on investment decisions: An empirical study of Jammu and Kashmir. International Journal of Multidisciplinary Educational Research, 10(1), 83-90.

  • Mehtab, F., & H. Nagraj. (2017). A behavioral approach to individual investment decision in Mutual Funds. SJCC Management Research Review, 7(2), 148-162.

  • Mishra, K.C., & Metilda, M. J. (2015). A study on the impact of investment experience, gender, and level of education on overconfidence and self-attribution bias. IIMB Management Review, 27(4), 228–239.

  • Prosad, J. M., Kapoor, S., & Sengupta, J. (2015). Behavioral biases of Indian investors: a survey of Delhi-NCR region. Emerald Group Publishing Limited, 7(3), 230-263.

  • Ramachandran, R. (2016). Behavioural finance: Investment pattern among the small investors with reference to Tamil Nadu. Journal of Banking Information Technology and Management, 13(2), 88-107.

  • Raut, R., & Kumar, R. (2018). Investment decision-making process between different groups of Investors: A study of Indian stock market. Asia-Pacific Journal of Management Research and Innovation, 14(1–2), 39–49.

  • Sabir, A. S., Razzaq, S., Humayon, A. H., & Hameed, W.UI. (2018). The influence of behavioural biases on investment decision making: A moderating role of religiosity among Pakistani investors. International Journal of Management Research and Emerging Sciences, 8(1), 87-98.

  • Saeed, K. (2020). Impact of heuristics biases on investment decision locus of control playing a moderating role. SSRN Electronic Journal. https://ssrn.com/abstract=3499658.

  • Samal, A., & Mohapatra, A. K. (2020). Impact of behavioral biases on investment decisions: A study on selected risk averse investors in India. International Journal of Advanced Science and Technology, 29(6), 2408-2425.

  • Shahid, M. N., Sabir, S., & Abbas, A. (2018). Impact of behavior biases on investors’ decisions: Evidence from Pakistan. Journal of Organizational Behavior Research, 3(2), 45-55.

  • Singh, H. P., Goyal, N., & Kumar, S. (2016). Behavioural biases in investment decisions: An exploration of the role of gender. Indian Journal of Finance, 10(6), 51-62.

  • Sumera, A., & Reddy, M. S. (2020). Behavioural biases in investing: Concepts, categorization, indicators and remedial measures. RVIM Journal of Management Research, 12(1).

  • Sushmita, Bhatia, R., & Sharma, S. (2018). Investor overconfidence and disposition effect: A evidence from India. Indian Journal of Research in Capital Markets, 5(3), 31-41.

  • Upadhyay, D., & Shah, P. (2019). Study on behavioral finance in investment decisions of investors in Ahmedabad. International Journal of Novel Research and Development, 4(7), 103-114.

  • Zaiane, S. (2015). Behavioral biases of individual investors: the effect of anchoring. Eurasian Journal of Social Sciences, 3(1), 13-19.

  • Zaidi, F. B., & Tauni, M. Z. (2012). Influence of investor’s personality traits and demographics on overconfidence bias. Institute of Interdisciplinary Business Research, 4(6), 730-746.


Abstract Views: 398

PDF Views: 0




  • Impact of Behavioral Biases on Investment Decision Making: Evidence from the Review of Literature

Abstract Views: 398  |  PDF Views: 0

Authors

Ranjana Upashi
Research Scholar, Kousali Institute of Management Studies, Dharwad, Karnataka, India
A.M. Kadakol
Director, Kousali Institute of Management Studies, Dharwad, Karnataka, India

Abstract


The objective of the present study is to explore the literature available on behavioural biases impacting investors’ decision-making. From the literature studied, the researcher observed that from 2010 onwards, there was an increasing interest in the research community to explore this emerging topic of behavioural finance. Hence past 11 years, from 2010 onwards, articles were considered for the study to understand the influence of biases on financial decision-making. The Systematic Review of Literature (SLR) method is used for the study. The present study facilitates the identification of the gap in the current body of knowledge, thereby guiding future research in behavioural finance. The literature of 32 papers proved the impact of behavioural biases like Overconfidence, Anchoring, Loss Aversion Availability Biases, etc., on investment decisions. A review of selected papers suggested the gaps in exploring the prominent factor among objective and subjective factors impacting investment decision-making among investors and its effect on choosing a particular investment avenue. The study would greatly help investors, financial advisors, and the government.

Keywords


Behavioral Finance, Behavioral Biases, Investment Decisions, Heuristics, Prospect Rules.

References