The Impact of Behavioural Factors on Individual Investors’ Investment Decision Making in Colombo Stock Exchange: Special Reference to Northern Province – Sri Lanka

Abstract

Behavioural finance is important component of investment decision making of the people. It is based on the psychology; attempt to understand how emotions and cognitive errors influence individual investors’ behaviours. This study sought to determine the impact levels of behavioural influences on the individual investor choices of securities at Colombo Stock Exchange (CSE). It was guided by one main objective seeking to determine the impact level of behavioural factors influences on the individual investors’ investment decisions at CSE. To meet the objectives of the study, a descriptive survey design was chosen. Primary data was collected using self-administrated questionnaires. It was based on 200 individuals selected through CSE Northern Province. The data analysis for this study was performed with the help of SPSS. This study used multiple regression and correlation analysis. To examine such impact of behavioural factors considered as the independent variable with the proxies of regret aversion, overconfidence, availability bias, past trends of stock, market information, buying and selling of other investors and individual investors’ decision-making is dependent variable. The findings reviled that the overconfidence, availability bias and past trends of stock have insignificant impact on investment decision of individual investors at CSE at 5 % significant level. The regret aversion, market information, buying and selling of other investors have significant impact on investment decision making of individual investors at CSE at 5 % significant level. The research, as overall, concluded that there is moderate significant impact of Northern province investors behavioral factors influence on individual investors’ decision making at CSE Sri Lanka