UNLOCKING THE INVESTMENT PUZZLE: THE INFLUENCE OF BEHAVIORAL BIASES & MODERATING ROLE OF FINANCIAL LITERACY

Authors

  • Shahid Kalim Khan Assistant Professor, Department of Business Administration, Thal University Bhakkar, Pakistan
  • Najam Ul Hassan Lecturer, Department of Economics, Thal University Bhakkar, Punjab, Pakistan
  • Javeria Islam Lecturer, Noon Business School, The University of Sargodha, Sargodha, Pakistan

DOI:

https://doi.org/10.53664/JSRD/04-02-2023-17-433-444

Abstract

This study aims to investigate the influence of behavioral biases on investors' investment decisions and explore the moderating role of financial literacy in this relationship. Research adopts quantitative approach, utilizing a survey questionnaire distributed among a sample of individual investors actively trading in Pakistan stock exchange. Survey assesses prominent behavioral biases like overconfidence, disposition effect, risk-aversion bias, and herding behavior, while measuring participants' level of financial literacy. Findings of study proves significant impact of behavioral biases on investors' decisions. Respondents validate prevalence of shared biases, including overconfidence, disposition effect, risk-aversion bias, and herding behavior. These biases tend to influence the decision-making process of investors, leading to suboptimal investment choices. Results suggest that financial literacy plays moderating role in linking behavioral biases and investment decisions. The implications of findings suggest importance of promoting financial literacy amid investors over guidance and support of financial professionals, ultimately improving quality of investment decision-making.

Details

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Published

29-06-2023

How to Cite

Shahid Kalim Khan, Najam Ul Hassan, & Javeria Islam. (2023). UNLOCKING THE INVESTMENT PUZZLE: THE INFLUENCE OF BEHAVIORAL BIASES & MODERATING ROLE OF FINANCIAL LITERACY. JOURNAL OF SOCIAL RESEARCH DEVELOPMENT, 4(2), 433–444. https://doi.org/10.53664/JSRD/04-02-2023-17-433-444

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Section

Articles