Individual Investment Decisions Research Articles

Broadband Internet and the Stock Market Investments of Individual Investors

ABSTRACTWe study the effects of broadband internet use on the investment decisions of individual investors. A public program in Norway provides plausibly exogenous variation in internet use. Our instrumental variables estimates show that internet use causes a substantial increase in stock market participation, driven primarily by increased fund ownership. Existing investors tilt their portfolios toward funds, thereby obtaining more diversified portfolios and higher Sharpe ratios, and do not increase their trading activity in stocks. Overall, access to high‐speed internet spurs a “democratization of finance,” with individuals making investment decisions that are more in line with the advice from portfolio theory.

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Advances in Artificial Intelligence and robotics have made it possible to automate many high-level cognitive skills, but different jobs and occupations may be affected differently by technological developments. High-skilled occupations are less at risk of automation, as they also require skills and competences that remain important bottlenecks to automation. However, according to OECD 2022 results, the jobs most at risk from automation will not disappear completely, as only 18-27% of the skills and competences required in these occupations are highly automatable. Rather, it is likely that the organisation of work will need to be radically changed and that workers in these jobs will need to retrain as technology replaces workers in many tasks. In my study, I aim to summarise, based on the literature of recent years, the key skills that will potentially equip workers for the diverse workplace demands of the near future, arising from technological developments. I conducted a keyword search of the Scopus database for future jobs, workplaces, occupations, skills, abilities and competences. I narrowed down the search results to the period 2021-2023, English language journal articles, economic and business fields and relevant keywords associated with the articles by the authors. In addition to these articles, I also reviewed the reporting materials of other relevant professional organisations (OECD, World Economic Forum) for the period. The geographical, regional and territorial differentiation of the studies was taken into account. In my findings, I have also discussed the role of universities and other educational institutions in meeting the employability expectations of the Fourth Industrial Revolution in order to ensure that they can provide skills that are as relevant as possible to market expectations.  I will highlight the top 69 skills identified in the hospitality industry and their groupings, and the elements of the 4 important skill groups identified for accountancy professionals. I also cover the future-proof skills that entrepreneurs are expected to have. In general, I will describe the appreciation of soft skills based on the academic findings of recent years. The results collected can also serve as useful information for individual human capital investment decisions, organisational training and even the design of training frameworks for educational institutions.

Factors Affecting Bitcoin Investment of Individual Investors

Purpose: This article clarifies the factors influencing individual investors' Bitcoin investments in the Vietnamese stock market.   Design/methodology/approach: We employed the Theory of Planned Behavior (TPB) and Technology Acceptance Model (TAM), a comprehensive survey with 300 responses, and quantitative analysis using SmartPLS from December 2022 to March 2023.   Findings: The findings reveal that the perceived usefulness of the Bitcoin market, subjective norms, self-efficacy, and herd behavior positively impact the Bitcoin investment decisions of individual investors in Vietnam.   Research, Practical & Social Implications: This study provides regulators and relevant agencies with more practical evidence regarding the Bitcoin market, facilitating the formulation of appropriate management policies in an emerging economy.   Originality/value: There is a shortage of research on the Bitcoin cryptocurrency investment market from the perspective of individual investors in emerging countries like Vietnam. Therefore, this study tries to shed light on individual investors with a comprehensive and objective overview to consider before making investment decisions. Additionally, the results can offer managers and relevant agencies empirical evidence to promulgate future regulations on the Bitcoin market.

Behavioral Factors Influencing Investment Decision of Individual Investor at Nepalese Stock Market

The investment decision of individual investor is influenced by macro/micro economic and behavioral factors. Interest rate, economic growth, inflation, government policy, technological developments, etc., are the macro-economic factors, and firm size, book-to-market equity, cash flow yield, earnings yield, and dividend yield, etc. are the micro-economic factors whereas accounting information, advocate suggestion, personal financial needs, social relevance, self-image/firm-image coincidence, etc. are the behavioral factor. This paper has analyzed the perception of investor on the selected behavioral factors that makes influence on individual investor's investment decisions at Nepalese stock market. Using the structured survey questionnaire, this study concludes that behavioral factors have significant influence on investment decision of individual investor. This study revealed that to get rich quickly, reputation of the firm, feelings for a firm’s products and services, and firm status in industry are the major influencing Self–image/Firm-image factor. On the other hand, friend or coworker's recommendations, family member opinion, and broker recommendation are the most significant influencing Advocate Recommendation factors. Similarly, return maximizing, stock marketability, ease of obtaining borrowed funds, and expected dividends are the major Personal Financial Needs factors, and past trends of stock, information of dividend, price level of other stock, and information of the stock market are the major Market Information factors for influencing investment decision of individual investor at Nepalese stock market.

Integrating Personality Traits and Behavioral Theories in Mutual Fund Investments: Unveiling Investor Dynamics

This article explores the interplay between personality traits, particularly the Big Five model, and the Theory of Planned Behavior (TPB) in shaping individual investment decisions in mutual funds. Utilizing the TPB's framework, the study examines attitudes, subjective norms, and perceived control, linking them to investor intentions. Focusing on India's growing mutual fund industry, the article highlights key industry metrics, indicating robust growth in assets under management and retail participation. Comparisons with developed countries underscore India's untapped potential in mutual fund investments. The research delves into the determinants of investment decisions, considering rationality, socioeconomic factors, and the impact of personality traits. Theoretical frameworks and literature synthesis support the proposed behavior intention model. The findings emphasize the vital role of personality, particularly openness to experience, in influencing investment behavior. In conclusion, the study contributes insights for asset management companies in tailoring schemes to align with investor commonalities. Keywords: Investor, personality traits, Theory of Planned Behavior, Mutual Funds investment

The influences of psychological factors on investors decision making in the South African derivative market

Studies in behavioral finance have shown that human behavior often diverges from the rationality assumed by economists, as their decisions can occasionally be swayed by their emotional and psychological states. Given this concern, the study examines psychological factors influencing individual decision-making in the South African financial market. A structured questionnaire was used in collecting data from 414 participants who are individual investors actively involved in trading in the Johannesburg stock exchange market with the application of the random sampling method. The main objective of this study is to explore the psychological variables or biases that determine the investment decision-making of individual investors. Furthermore, this paper investigates psychological factors such as Anchoring, Herding, Overconfidence and Representative biases in investment decision-making. Findings revealed that all the variables, overconfidence, herding, anchoring and representative heuristics have a relationship with each other but the only variable that influences the individual investment decision is the representative heuristic while less consideration is given to another variable. The results of this study would help financial advisors understand the high importance of psychological factors and help them integrate behavioral insights into investment strategies. This will in turn help them provide better services to their clients. It will also help individual investors to acknowledge and understand the psychological factors influencing investment decisions and how to take note of them to make better decisions. Policymakers can consider the implications of psychological biases on market stability.

Determinants of individual investment decision: A moderated mediation model

This study aims to examine the effect of financial self-efficacy, risk tolerance, risk perception, and gender on individual investment decisions using a moderation and mediation approach. In addition, this study also examines the role of risk tolerance in mediating the effect of financial self-efficacy on investment decisions as well as the role of gender in moderating the effect of financial self-efficacy on risk tolerance and investment decisions. The sample used in this study is individuals living in Madura Island who invest in financial and real assets. A total of 416 respondents filled out the questionnaire distributed online. This study uses Partial Least Square-Structural Equation Modeling (PLS-SEM) to test the hypotheses. The results of this study prove that financial self-efficacy, risk tolerance, and gender have a positive effect on individual investment decisions. Meanwhile, risk perception has a negative effect on individual investment decisions. Risk tolerance partially mediates the effect of financial self-efficacy on investment decisions. Furthermore, gender strengthens the effect of financial self-efficacy on risk tolerance and investment decisions. This study provides an understanding of the role of risk in investment decisions. Investors are expected to increase their financial knowledge and control their behavioral biases so as not to get trapped in high-risk investments.

The effect of macroscopic herd inputs on individual investment behaviour

Decisions are rarely made in isolation and the role of others’ decisions in guiding our own has been observed in a diversity of contexts. This influence is often argued to result from an information cascade, where decisions in a sequential setting are influenced by the early decisions of others. However, the degree to which individuals modify behaviour through the integration of social information (i.e., other people’s decisions) varies considerably. While significant literature has been dedicated to understanding individual determinants for this variation, we propose that we should not ignore the aggregate characteristics of the herd itself. Specifically, we examine whether the scale and longevity of the herd itself at the time when an individual decides, defined as macroscopic herd inputs, influence whether individuals integrate social information. By employing data from a social trading platform, we find that macroscopic herd inputs exert a strong influence on individual investment decisions, showing that the influence of others’ behaviour on our own is in part dependent on the nature of the herd itself.

Psychological Biases and Contextual factors as the determinants of Financial Satisfaction: An Evidence-Based Study on Individual Investment Decisions

Psychological Biases and Contextual factors as the determinants of Financial Satisfaction: An Evidence-Based Study on Individual Investment Decisions

The impact of environmental, social, and governance information on individual stock investment decisions

The global business landscape has seen a growing necessity for companies to implement and disclose environmental, social, and governance (ESG) information (AlHares et al., 2023). Driven by the expectations of investors and society, companies find themselves obligated to publish ESG reports. Therefore, this study focuses on exploring the impact of ESG information on the investment decisions made by individual investors in Vietnamese stock markets. By employing the theory of planned behavior (TPB) and conducting a comprehensive survey, coupled with logistic regression analysis on a sample of 232 individual investors, our research uncovers a significant influence of ESG information on the stock decision-making process of these investors. Notably, our findings reveal that investors place greater emphasis on governance (G) information compared to social (S) and environmental (E) information when making investment decisions. This trend aligns with the conclusions drawn by Sultana et al. (2018) and Mehwish et al. (2022) but diverges from the findings of Rounok et al. (2023). These findings are poised to catalyze the disclosure of ESG reports among listed companies. They also impel policymakers to craft and implement policies actively promoting ESG reporting. Such initiatives will likely foster increased interest and bolster investments in companies adhering to ESG criteria, particularly among individual investors in emerging stock markets.

Determinants influencing investment decisions of individual investors: The case of the developing economy

In recent years, the Vietnam stock market has recorded a large number of new investors, of which individual investors account for the majority. Although it has increased both in the number of listed shares and in trading value, price fluctuations are very unpredictable over different periods, and awareness of factors influencing investment decisions is still limited, leading to a high risk of loss in investment activities (Mayfield et al., 2008). The research was carried out in order to point out the factors influencing investment decision-making among potential individual investors, thereby proposing solutions to improve investment efficiency. The study used data from 261 questionnaires with four hypotheses, using qualitative and quantitative research methods, Cronbach’s alpha, exploratory factor analysis (EFA), and regression analysis by SPSS software. As a result, four elements influencing: 1) personality traits, 2) behavioral factors, 3) company-related factors, and 4) exogenous factors have a positive impact on the stock investment decisions of individual investors. Thereby the article shows solutions from the government, the stock market, businesses, and individuals to improve investment efficiency.

The Dynamics of Individual Investment Decisions: Evidence From The Dhaka and Chittagong Stock Exchange, Bangladesh

Research aim: Behavioural finance plays an analogous role to fundamental and technical analyses for investment decisions in the stock market. It deals with various factors that manipulate investment decisions. This study explores the factors influencing individual investment decisions in the Dhaka and Chittagong Stock Exchange (DSE and CSE) of Bangladesh. Design/Methodology/Approach: Based on existing finance theories and literature, several factors were included in the self-developed questionnaire, with data collected using random sampling. We used SPSS (Version 26) to analyse the primary data collected. In the questionnaire, there were 24 variables, and statistical analysis (multiple regression) was carried out. Research finding: There were 24 variables, five of which (i.e., investor experience, impact of P/E ratio, impact of fundamental analysis, impact of securities and brokerage firm, and impact of investor psychology) had significant impact on individual investment decisions in the CSE and DSE. Theoretical contribution/ Originality: Theories pertaining to individual investment decisions are based on individual judgment, sentiment, risk perception, and risk attitude. These mechanisms are associated with behavioural finance. Various behavioural finance studies have been conducted in developed countries, but not in developing countries like Bangladesh. As such, the dynamics of the investment decision are the main focus of the present study. Practitioner/ Policy implication: This article can serve as input to investment decisions that have an impact on economic value at the firm, industry, and macroeconomic level. Moreover, it highlights the role of related stakeholders and extent to which they influence investment decisions. Research limitation: This study is country-specific, and the number of respondents is limited to 125 only. We could not consider the impact of technological advancement during this period.

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Purpose - In this study, we examine the factors related to the asset allocation decisions of individual investors who 1) directly invest in stocks or bonds, 2) indirectly invest in various fund products (excluding CMA and MMF), and 3) invest in both products.
 Design/methodology/approach - We collect a sample of 3,000 individual investors and investigate the factors influencing investment behavior, especially the diversification tendency in asset allocation, with the “Investor Behavior Survey” that is conducted jointly by the Korea Financial Investment Association and the Korea Gallup Research Institute in 2011 and 2012.
 Findings - Our regression analyses estimate the marginal effects of various factors such as the amount of total financial assets, monthly income, occupation, age, and gender. The results reveal that male investors with manual labor occupations were less inclined to diversify their investments compared to female investors in office jobs. Additionally, higher monthly income is associated with a greater inclination toward diversification. Therefore, if a positive relationship exists between income and educational level, we may suggest that higher educational levels lead to a greater tendency for diversification.
 Research implications or Originality - Interestingly, investors who engage in direct investments tend to exhibit a weaker diversification tendency as the amount of their direct investment increases. On the other hand, investors who engage in both direct and indirect investments show a weaker diversification tendency as the amount of total financial assets increases. This suggests that the investment style of investors is closely related to their diversification behavior.

Investor’s Intention to Invest in the Stock Market Amidst the Economic Crisis in Sri Lanka: Using an Extended Theory of Planned Behavior

The primary objective of this research is to investigate the behavior of individual investors in the context of stock market investments during Sri Lanka's economic crisis. The study employs an extended version of the Theory of Planned Behavior (TPB) to comprehensively understand the factors influencing individual investor decisions. Utilizing a quantitative approach, the research aims to determine the better prediction of this expanded TPB in predicting individual investor behavior amid economic challenges. Data was collected through a systematic self-administered questionnaire distributed to both existing and potential individual investors. The relationship between variables was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results demonstrated that, amid the economic crisis, the subjective norms towards investing had the largest impact on individuals' intentions to participate in the stock market and Risk avoidance and Uncertainty avoidance had a highly significant influence on investor’s intentions. This research examined only current and prospective Colombo stock market investors' investment intentions during Sri Lanka's economic crisis. Few studies have attempted to include risk avoidance and uncertainty avoidance within a decision-making framework and future studies focus on these diverse market contexts. Owing to the economic downturn in Sri Lanka, the augmented TPB put forth in this study has contributed valuable insights for financial professionals, regulators, as well as existing and prospective investors. It furnishes a substantial knowledge base to aid in making informed investment decisions. Furthermore, it offers an expanded comprehension to existing and potential investors about the intricacies of the relationship between investment intentions, thereby widening their perspective.

The Effects of Advertisements on Influencing Decisions to Invest in Riskier Financial Assets

This research’s main purpose is to discover whether psychological and social factors have a significant effect on a person’s attitudes toward advertisement, ultimately affecting their investment decisions. This research utilized GOTO Stockbit’s advertisement and was distributed to the public Indonesian population who has an interest in investment. The research collected a total of 115 samples which were then filtered to only include those who had experience investing to test the possibility of investing in a riskier financial asset. The research results show that psychological factors had no significant effects on attitudes toward advertisements. However, social factor has a significant enough effect on attitudes toward advertisement, as do attitudes toward advertisement toward investment decision. The study results that social factors lead to a positive attitude toward advertisements from securities that motivate individuals to make an investment decision. However, this study’s results show that psychological factors do not lead to any investment decisions by individuals as it has little to no effect on their attitude toward advertisements. This research aims to measure the effectivity of security advertisements on the investment decisions of individuals by adding a new study goal by introducing new hypotheses involving psychological and social factors to add clarity to previous research covering investment decisions. This research hopes that security brokerage can make an effective and optimal advertisement suggested in the research.

Risk Tolerance and Investment Decisions among Credit Beneficiaries

Risk attitude and risk perceptions are two crucial factors that could influence an individual's investment decisions. In developing countries like Pakistan, the whole society experiences different risks; however, financial risk is an essential factor affecting investors' decisions. This study used a dataset of 120 respondents collected through face-to-face interviews from two districts of Punjab province. A logit model is used to assess the impact of various socio-economic and behavioral factors on respondents' decisions to invest the borrowed money in enterprises. The findings revealed that investment in low-risk enterprises and diversification of income were the two main strategies adopted by the survey respondents. The results further revealed that health risk perception has positive while risk tolerance has a negative influence on the decision to invest in low-risk enterprises to mitigate the adverse consequences of risks. The findings also revealed that education and the adoption of diversification of income sources are positively correlated, while the perception of non-repayment and coefficient of location are negatively correlated with the adoption of diversification of income sources. Additionally, the study recommends that the Government should make sustainable and investor-friendly credit policies and educate the general public on how to use credit efficiently.

Evaluating The Impact of Financial Literacy Programs on Investment Behaviours: A Survey Study

In the face of increasingly complex financial markets, the role of financial literacy in guiding investment decisions has never been more critical, especially in burgeoning economies like India. This study delves into the transformative power of financial literacy programs, evaluating their effectiveness in altering and improving individual investment behaviors. The research pivots around two fundamental questions: "To what extent do financial literacy programs affect individual investment decisions?" and "Do these programs foster more informed and rational investment behaviors?" The hypothesis — that financial literacy programs significantly influence investment behavior, prompting more informed and rational decisions — was formulated in response to a noticeable literature gap concerning empirical evidence of behavioral change post-financial education in the Indian context.
 Adopting a quantitative research design, this study employed a survey methodology, encompassing a diverse demographic to ensure a comprehensive analysis. The survey assessed participants' financial knowledge and investment strategies before and after attending financial literacy programs. The results were telling; participants demonstrated a significant shift towards regular, diversified investment practices, a reduced reliance on informal advice, and an increased confidence in financial decision-making post-program.
 The study conclusively supports the hypothesis, highlighting the critical role of financial literacy in shaping prudent investment behavior. These findings have profound implications for individuals, policymakers, and educators, underscoring the need for widespread, effective financial education. The research advocates for the integration of financial literacy in school curriculums, the regulation of financial information, and the tailoring of programs to cultural nuances. Ultimately, the study posits financial literacy not merely as an educational outcome but as a catalyst for economic empowerment and societal prosperity.

Social Biases and Equity Investment Decisions of Individual Investors: Behavior Finance Perspective

Individual investors may not always pose a rational decision on stock market and heavily guided by their behavioral and social biases. This study is delineated to examine the role of social factors in the decision-making process of individual investors. This study is based on quantitative research approach and utilized a 5-points Likert type closed-end structured questionnaire survey to collect the data from 269 individuals, invested in the firms listed at Nepal Stock Exchange (NEPSE). This study utilized reliability analysis, descriptive statistics, Pearson correlation coefficient and ordinary least square (OLS) method. Evidence indicates that herding, social interaction and media effect shows the positive influences on equity investment decision process of the investors. Finally, this study justified that social biases play the significant role for equity investment decisions of the individual investors through excessive follow the humor of the market place, over or under reaction of the information about securities, follow the suggestions and recommendations of peers, friends, family members and neighbors along with highly depend upon news, social medias and information of so-called experts of capital market that leads to investment mistakes. Hence, investors should strongly follow the proper information about stock and market, utilize their own knowledge about information processing and analysis, and try to reduce the biases while making decisions through information analysis and processing that may downsize the irrational decisions.

The Influence of Investment Profitability and Investment Risk on Individual Investment Decisions

Investment is one way to gain profits and increase wealth, research on understanding investment risks to individual investments is very important to understand. Research on Understanding Investment Risk in Individual Investments aims to determine the extent to which individuals understand investment risk, as well as how investment risk influences individual investment decisions. The results obtained show that understanding investment risks has a very positive influence on individual investment decisions in order to get the desired results.

How Behavioral Finance Impacts Investor Decision-Making: an Empirical Study of the Pakistan Stock Exchange

This research intended to explore the impact of behavioral finance on investor decision making within Pakistan stock exchange (PSX). A Quantitative explanatory research was used. Data was collected using convenience sampling from retail investors from a representative sample. 412 filled questionnaires were used for the analysis. Data was tested through Smart PLS that is an application that runs using structure equation modeling (SEM). In broad terms, our empirical findings suggest that an excessive risk-taking culture can be a source of financial instability. Our findings suggest that financial behavioral biases such as, herd mentality, overconfidence and loss aversion that significantly affect investor decision-making in the stock market have practical implications for market practitioners and policy makers suggesting the need for better understanding of investor behavior and strategies to promote more rational share pricing in the stock market. In recognizing and dealing with these biases, market participants’ individual investment decisions could potentially be enhanced and in resolving market inefficiencies, these biases could be their mitigation.