Behavioural Finance and Malaysian Culture

Mohamed Albaity,Mahfuz Rahman

doi:10.5539/ibr.v5n11p65

Abstract

This paper examines how gender, religion, and ethnic differences influence the key determinants of individual investment behavior, which are risk taking, skill, luck, happiness, maximization, regret, confidence and trust. We find that gender difference is significantly associated with risk taking behavior and maximization as well as overconfidence. Religious beliefs and ethnic origins significantly affect life time income risk, regret, maximization, happiness, confidence and trust. However, the addition of these, Malaysian have relatively high level of regret and risk taking propensity in portfolio, and low level of maximization, happiness and general risk taking behavior than non Malaysian.

Highlights

Behavioral finance has made advances in explaining the behavior of markets
We examine whether individual from different religion background are significantly different in terms of risk taking, skill, believing in luck, Happiness, maximization, regret, and trust
The aim of this study is to investigate whether there is a significant difference in gender, religious affiliations, ethnicity and the country of origin with regard to risk taking propensity, regret, maximization, happiness trust and general risk taking

Summary

Introduction

Behavioral finance has made advances in explaining the behavior of markets. It focuses on the irrational behavior of the individuals in the economy. The relationship between gender and risk taking behavior has been studied quite frequently. One particular aspect that has received a lot of attention in recent years is the significance of difference in risk taking behavior by gender as a determinant of household investments (Campbell, 2006). Jianakoplos and Bernasek (1998) investigate how women are different from men in risk aversion. It indicates that there is a positive relationship between women age and risk aversion. Men tend to be more overconfident than women, which can be linked to women’s risk aversion behavior in general

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Conclusion