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Behavioural Finance: An Introspection of Investors Psychology

Author

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  • G. K. Deshmukh

    (Assistant Professor, Institute of Management, Pt. Ravishankar Shukla University, Raipur (CG), India.)

  • Sanskrity Joseph

    (Assistant Professor, Institute of Management, Pt. Ravishankar Shukla University, Raipur (CG), India.)

Abstract

Purpose: Investors always try to make rational decision while analyzing and interpreting information collected from various sources for different investment avenues to arrive at an optimal investment decision. But at the same time they are influenced by various psychological factors that influence them internally and bias their investment decision. Linter (1998) studied the various factors that influence internally the informed investment decision and included them under the discipline of behavioural finance. Behavioural finance studies how people make investment decision and influenced by internal factors and bias. The main purpose of the paper is to assess impact of behavioural factors over mutual fund investment decision made by investors in Raipur city. Design/methodology/approach: The researchers conducted a survey on factors of behaviour of investors with respect to investment in mutual fund industry from 300 investors of mutual funds across different demographic profiles in Raipur city. Major Result / Findings: The researchers assessed that factors like perception, motivation, incentive potential, intensity of cues play major role in formation of intention to invest which further influence investors in Raipur city to take investment decision that determines their satisfaction with mutual fund which is based on performance and growth of a particular mutual fund. Implications: This paper helps in analyzing the factors which influence formation of intention to invest and further direct towards investment in a particular mutual fund. Various mutual fund companies can concentrate on these factors to devise strategies to pull investors to invest in their mutual fund. Originality/value: This a fairly original paper which has tested the model developed by researchers using SEM. Paper type: Empirical and descriptive

Suggested Citation

  • G. K. Deshmukh & Sanskrity Joseph, 2016. "Behavioural Finance: An Introspection of Investors Psychology," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 7(1), pages 97-102, January.
    • Handle: RePEc:aii:ijcmss:v:07:y:2016:i:1:p:97-102
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    References listed on IDEAS

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    1. Markus Glaser & Thomas Langer & Martin Weber, 2007. "On the Trend Recognition and Forecasting Ability of Professional Traders," Decision Analysis, INFORMS, vol. 4(4), pages 176-193, December.
    2. Barberis, Nicholas & Thaler, Richard, 2003. "A survey of behavioral finance," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 18, pages 1053-1128, Elsevier.
    3. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    4. Frankfurter, George M. & McGoun, Elton G., 2002. "Resistance is futile: the assimilation of behavioral finance," Journal of Economic Behavior & Organization, Elsevier, vol. 48(4), pages 375-389, August.
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    Cited by:

    1. Babli Dhiman & Saloni Raheja, 2018. "Do Personality Traits and Emotional Intelligence of Investors Determine Their Risk Tolerance?," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 43(1-2), pages 88-99, February.

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