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Impact of Behavioral Biases on Investment Performance in Pakistan: The Moderating Role of Financial Literacy

Author

Listed:
  • Muhammad Umer Quddoos
  • Amir Rafique
  • Usama Kalim
  • Muhammad Ramzan Sheikh

Abstract

This study aims at understanding the relationships of certain behavioral biases with the investment performance, and identifies the moderating role of financial literacy upon these hypothesized relationships. Data is collected through questionnaire from the investors trading at Pakistan Stock Exchange (PSX). Structured Equation Modeling (SEM) is used to analyze the data with the results that only anchoring and overconfidence biases have significant effects on investment performance. The results also show that presence of financial literacy does not play any role in improving the performance of investors. Majorly, findings of current study contribute by testing the moderating role of financial literacy between the behavioral biases and the outcome of investment decisions and thus expected to be useful for investors and policy makers. &

Suggested Citation

  • Muhammad Umer Quddoos & Amir Rafique & Usama Kalim & Muhammad Ramzan Sheikh, 2020. "Impact of Behavioral Biases on Investment Performance in Pakistan: The Moderating Role of Financial Literacy," Journal of Accounting and Finance in Emerging Economies, CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan, vol. 6(4), pages 1199-1205, December.
    • Handle: RePEc:src:jafeec:v:6:y:2020:i:4:p:1199-1205
    DOI: http://doi.org/10.26710/jafee.v6i4.1512
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    Cited by:

    1. Zeeshan Ahmed & Shahid Rasool & Qasim Saleem & Mubashir Ali Khan & Shamsa Kanwal, 2022. "Mediating Role of Risk Perception Between Behavioral Biases and Investor’s Investment Decisions," SAGE Open, , vol. 12(2), pages 21582440221, May.

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