Determinants Influencing Individual Investor Behavior in Stock Market : A Cross Country Research Survey

Abstract

Although finance has been studied for several decades, behavioral finance which considers the human behaviors in finance is a quite new area. Behavioral finance theories, which are based on the psychology, attempt to understand how emotions and cognitive errors influence individual investors’ behavior. The individual investor plays a vital role in the stock market because of their good savings. The regulators of the stock market cannot ignore the behavior of individual investors. Many individuals find investments to be fascinating because they can participate in the decision making process and see the results of their choice. Not all investments will be profitable, as investors’ whims not always result in fruitful returns. Recent studies on the behavior of individual investors’ have shown that investors do not act in a rational manner. Several behavioral factors influence their investment decisions in stock markets. The present study aims to review the research studies and literature to gain knowledge about key factors that influence investment behavior in different countries and the ways these factors impact investment risk tolerance and decision making process among men and women and among different age groups.