The Economics of Behavioral Finance and its Effects on Investment Decisions in Kurdistan Region of Iraq for the Period 2020-2022

Abstract

This quantitative research aims to examine the influence of behavioral biases and financial education on investment choices made by residents of Kurdistan Region of Iraq. The research used regression analysis to look at the connection between behavioral biases, financial literacy, and investment choices among 200 regional investors. Investment choices in the region were found to be significantly influenced by behavioral biases, including loss aversion and overconfidence. It was also discovered that investors with higher degrees of financial education were less vulnerable to behavioral biases, suggesting that financial education had a positive impact on investment behavior. Statistical significance between behavioral biases, financial literacy, and investment choices was indicated by a p-value of less than 0.05 in the regression analysis. The research found that investing decisions in the Iraqi Kurdistan area were greatly influenced by cognitive biases. This research shows that financial education is crucial for reducing the impact of behavioral biases and increasing the likelihood of making well-informed investing choices. To enhance investment behavior and lessen the effect of behavioral biases on investment decisions, the study suggests implementing financial education. The results have substantial ramifications for regulators, banks, and individuals in the region who are interested in influencing investment patterns and expanding access to financial services as well as literacy programs. By empowering individuals to make educated investment decisions, these types of programs have the potential to expand access to financial services and stimulate regional economies.