IDEAS home Printed from https://ideas.repec.org/a/ids/ijmcph/v19y2026i1p1-24.html

The role of psychology in investment decision-making: exploring behavioural finance of financial literacy through SEM analysis

Author

Listed:
  • Naveen Kumar Ranganathan
  • Shobha Basavaraj Gali
  • Janani Mylswamy
  • John William Arokiasamy
  • Pavithra Rajendran

Abstract

People naturally want to save money and grow it over time. This is where understanding your own financial psychology comes in. Making investment decisions is like a personal art and science, crucial for your financial well-being. The various cognitive biases like overconfidence, perception, representation, anchoring, cognitive dissonance, mental accounting, risk aversion, loss aversion, and narrow framing can significantly influence investors' decision-making processes. These biases may result in investors overestimating their knowledge, misinterpreting information, relying on past experiences, or sticking to fixed beliefs despite conflicting evidence. Understanding these biases is crucial for making objective and rational investment decisions. The study surveyed 250 postgraduate students in Bangalore who identified already as investors and found that fear of loss, aversion to regret, and mental accounting significantly impact investment decisions. Therefore, It is essential for investors to recognise and address their emotional and cognitive biases to make more informed and effective investment choices.

Suggested Citation

  • Naveen Kumar Ranganathan & Shobha Basavaraj Gali & Janani Mylswamy & John William Arokiasamy & Pavithra Rajendran, 2026. "The role of psychology in investment decision-making: exploring behavioural finance of financial literacy through SEM analysis," International Journal of Management Concepts and Philosophy, Inderscience Enterprises Ltd, vol. 19(1), pages 1-24.
    • Handle: RePEc:ids:ijmcph:v:19:y:2026:i:1:p:1-24
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=150680
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijmcph:v:19:y:2026:i:1:p:1-24. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=90 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.