Abstract
Risk matrix, as a well know tool for corporate finance, penetrates public finance as a simplified idea in budgetary guides in a small number of leading countries only. At the same time the complexity of socio-economic environment of public finance, needs of public finance manageability and high sovereign debt call for advanced the risk matrix design. The first step of the research is the observation of the leading countries’ matrix examples and articles targeting the same topic to determine the risk matrix structure. The second step involves comprehensive reading of the most transparent countries to create a list of the matrix factors. The factors include key socio-economic events as sources of risks and key budgetary variables changes as types of risks. The third step ranges the matrix elements (cells) by their occurrence in G20 countries based on comprehensive reading of IMF countries’ reports. The research result is a one-page risk matrix with 10x13 key factors and many ranging elements, designed as the compromise between the environment complexity and manageability needs for public finance.
Highlights
As the dynamic of the investment changes it enhances the importance of decision making which is the part of the Behavioral finance
The result shows that risk aversion is an important criterion in decision making but the investor that are risk averse are more logical and rational (Hunjra et al, 2012)
These believe and information create or force the investor to take any decision it can be an overreaction of available information or it can be a suitable decision for the betterment of the firm
Summary
As the dynamic of the investment changes it enhances the importance of decision making which is the part of the Behavioral finance. If the organization makes an appropriate decision of investment it will result in an increase of firm productivity and outcome (Mayfield et al, 2008) Researchers such as Kengatharan and Kengatharan (2014), Qadri and Shabbir (2014), Nofsinger and Varma (2013), highlighted the positive relationship between behavioural factors and decision making of investment in the stock market by an investor. This research focuses on the detailed analysis of the experience of the investor as well as the corporate governance and other factors It covers both theoretical and observed involvement of the factor in the decision making of investment. The study is limited to the investment decisions of the Iraqi investors it covers the moderating factors such as age, gender and financial education of the investors which is the contribution of the current study and in this way this study adds value to the current state of knowledge in the domain of behavioral finance
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