The intention of investors to invest over a long term is generally aimed toward stable returns and low liquidity. The framework of this article looks at the theoretical concepts, investor ...characteristics and investor bias in a risk profile that could influence investors' intent to invest over the long term. Based on traditional investment theory, investment companies acknowledge the impact of risk tolerance on the desired investment horizon of investors. However, traditional risk assessments are limited since they omit variables like personality measures and behavioural finance biases which could affect an investor’s long-term investment intentions. The unfavourable results might be less accurate investor profiles and an investment portfolio not meeting the required return objective. This study included a sample size of 593 private investors. The results indicated that personality traits (extraversion, openness to experience), risk tolerance, and behavioural biases (overconfidence bias) significantly influence long-term investment intentions. By incorporating the above-mentioned factors, financial planners and institutions can more accurately profile their clients and offer financial products that are more suitable for the investor's needs.
Attitude of Muslim minority in Spain towards Islamic finance Kaakeh, Abdulkader; Hassan, M. Kabir; van Hemmen Almazor, Stefan F
International journal of Islamic and Middle Eastern finance and management,
06/2018, Letnik:
11, Številka:
2
Journal Article
Recenzirano
Purpose
This paper aims to use a theoretical model based on the theory of reasoned actions to investigate the effects of attitude, religious motivation, awareness and service and pricing on the ...intention to use Islamic banking among the Muslim minority in Spain. It also aims to determine the profile of a potential Islamic banking customer among this minority.
Design/methodology/approach
The research focuses on a survey of Muslims living in Barcelona, Spain, who know of the existence of Islamic finance but do not have access to it. The research uses factor analysis and logit regression to analyse the data.
Findings
The results show that attitude, religious motivation and awareness are important factors affecting the intention to use Islamic banking. The study also shows that the potential Islamic banking customer in Spain is a Muslim (Spanish, Moroccan or Pakistani), male, and did not reach university degree in his education.
Research limitations/implications
The sample has 154 participants living in Barcelona, with the rest of Spain being ignored, although results should apply to all Muslims in Spain. Also, this study does not consider attitude as a moderator.
Practical implications
The research shows the potential for Islamic banks in the Spanish market and the possibility of raising awareness about Islamic banking.
Social implications
Islamic banking in Spain could help the Muslim minority to participate effectively in financial activities, thus leveraging their capacity to integrate into the community. The study also highlights the importance of empowering the women in this minority and could help society by encouraging off-banking money to flow into the financial sector.
Originality/value
The research is the first empirical attempt to test the factors affecting the intention among Muslims in Spain to deal with Islamic banking. The study also highlights the importance of Islamic finance for Muslim minorities as a method to support their religious identity.
This paper investigates the interconnections between real economy and the financial market in a discrete dynamical framework. We focus on the effect of the dividend policy decided by managers and the ...expectations of investors about future payments. We found that an excessively high dividend payout ratio erodes the economy, while in the opposite case instability and fluctuations arise. By means of analytical results and numerical simulations we show that the positive return of government bonds leads to instability, while investors’ expectations modify the path of the asset price.
•We investigate the co-evolution of physical capital and a financial asset.•An excessively high dividend payout ratio may erode the economy.•A low dividend payout might cause economic fluctuations.•Positive returns for government bonds lead to instability.•Unfulfilled expectations over dividends affect the path of the asset price.
Motivated by the growing convergence between news media and social media as dominant sources of information dissemination, this study examines the connection between textual sentiment and stock ...returns. Previous studies have examined the effect of sentiment extracted from these two sources on stock returns independently, without modelling how one source can confound the relationship between stock returns and the other source. We investigate this using data from four markets (USA, UK, South Africa and Brazil) and a sample period stretching from January 2016 to April 2023. Employing a suite of methods that encompass both simple parametric techniques and complex models designed to address nonlinearity, chaos and deviations from normality, the analysis uncovers a pronounced impact of social media sentiment on stock returns in the United States. This influence overshadows the effect of news media sentiment across the employed methods. Interestingly, in other markets, news media exhibits a greater effect on stock returns compared to social media sentiment. By emphasising the convergence of news media and social media, the study highlights the important interplay between these sources, offering valuable insights into understanding the complex dynamics of modern financial markets.
Abstract
Both gambling and trading involve risk-taking in exchange for potential financial gains. In particular, speculative high-risk high-frequency trading closely resembles disordered gambling ...behaviour by attracting the same individuals who tend to be overconfident, sensation-seekers, and attracted to quick large potential payoffs. We build on these studies via an incentivised experiment, in which we examine how manipulated levels of market volatility affected trading frequency. Gamblers (N=604) were screened based on the existence of household investments and recruited across the four categories of the Problem Gambling Severity Index. The volatility of stocks was manipulated between-participants (high vs. low). Participants traded fictitious stocks and were provided bonuses based on the results of their trading activity (M=US$4.77, range=0, 16.99). Participants traded more often in the high-volatility market, and this finding remained robust after controlling for financial literacy, overconfidence, age, and gender. Many investors trade more frequently than personal finance guides advise, and these results suggest that individuals are more likely to commit this error in more volatile markets. Exploratory analyses suggest that the effect of the volatility manipulation was strongest amongst gamblers who were at low-risk of experiencing gambling harms. As they might be otherwise considered low-risk, these individuals could be overlooked by protective gambling interventions yet nonetheless suffer unmitigated financial harms due to unchecked excessive trading.
Abstract
In this study, the impact of behavioural finance on investment decision-making using a selected investment banks was investigated. A total of 200 questionnaire items were administered to the ...respondents of the four surveyed investment banks including Afrinvest West Africa Limited, Meristem Securities, Vetiva Capital and ARM Nigeria Limited, out of which 180 questionnaire items representing 90 per cent were retrieved. The data were analyzed using tables, percentages, correlation and multiple regression analysis. The overall empirical results provided evidence of a positive impact between behavioural finance and investment decision, supporting previous research and contributing to generalization. The other findings of the research are thus: there is a significant relationship between heuristics and individual investment decision; there is a significant relationship between prospect theory and individual investment decision; and lastly there is a strong and negative relationship between heuristics and investment decision. Similarly, the relationship between prospect theory and investment decision is negative and strong. Against the backdrop of the aforementioned findings and conclusion, the following recommendations are proposed to both the institutional and individual investors: investors should be enlightened on the fact that there are many behavioural factors which can affect their investment decision-making process and they should be made aware of these factors including heuristics and prospect theory.
Modern financial theory relies on the rationality assumption of investors even though, evidence suggests that market investors are affected by behavioural biases such as overconfidence and ...disposition effect. Overconfident investors perceive situations better than what they actually are, while investors exhibiting disposition effect tend to dispose winner shares and keep loser ones. However there is not clear causal relationship between both biases. We contribute to the literature about overconfidence and its relationship with the disposition effect, using a simulation model often named micro world, representing an artificial financial stock market. We propose a methodology combining qualitative (QCA) and quantitative (Logistic Regression) techniques to correlate transactions’ outcomes with investors’ characteristics. Results suggest that overconfidence is explained by gender, career and education level, while age, nationality, and profits are not significant variables. We also confirm that investors exhibiting disposition effect are more prone to be overconfident
Research aim: The paper addressed two objectives: examining the differences in behavioural traits with regard to risk attitudes, and explore the differences in financial risk attitudes with regard to ...demographic profiles of Malaysian investors. Design/ Methodology/ Approach: Using the t-test and one-way analysis of variance (ANOVA), this paper investigates how differences in behavioural trait bias among 241 master of business administration students in Malaysia affect their financial risk attitudes. Research finding: First, we find that the financial risk takers have higher levels of overconfidence, maximization, happiness, and trust than the risk-averse respondents. Second, in terms of demographics, we find that the following take significantly higher risks: men versus women, singles versus those who are married, and, those with lower income and less work experience. Besides, in terms of race, the Chinese are the greatest financial risk takers. Theoretical contribution/ Originality: Both the behavioural traits and financial risk attitudes are new for a multicultural background market like Malaysia. Reflections on the findings suggest that the financial planners need to take cognisance of such relationships, tendencies and risk preferences so as to understand their client inclination and provide appropriate advice to their investor clients. Research limitation/ Implication: Categories under the research design and sample selection can be further extended by considering more advanced research approach and a bigger size of sample respondents. Keywords: Behavioural Finance, Behavioural Traits, Risk Attitudes, Financial Risk, Demographic Profiles Type of article: Research paper JEL Classifications: D14, D91, G41 Received: 31 January 2020 Revised: 15 April 2020, 24 April 2020 Accepted: 6 May 2020 Published online: 29 January 2021
Drawing from the rich literature in behavioural finance and extensive analysis of forum data from a UK equity crowdfunding platform, we present a comprehensive framework that delineates the ...investment decision-making process of equity crowdfunders. Our framework captures the utilitarian, emotional, and expressive investment motives that drive crowdfunders, their behaviours and actions during and after the campaign, as well as the challenges they encounter in fulfilling their investment goals. Our work highlights the crucial need to explore the extent to which entrepreneurs and crowdfunding platforms cater to the diverse investment motives and expectations of the crowd. We offer practical insights to entrepreneurs and platforms on how they can better align their strategies with the expectations and needs of equity crowdfunders.
Plain English Summary
Our research presents a novel framework that delves into the intricacies of the investment experience of equity crowdfunders. We examine the underlying motives that drive their investment decisions (utilitarian, emotional and expressive), the corresponding behavioral patterns, and the challenges that they encounter along the way. Drawing on the principles of behavioral finance, we contend that the success of equity crowdfunding as an alternative funding source for entrepreneurial firms hinges on the platform's ability to meet the diverse investment motives of the crowd across different stages of the investment process. To illustrate our argument, we conducted a netnographic analysis of a UK-based online community of equity crowdfunders. Our findings expose the adverse effects of a lack of monetization and low economic returns on the utilitarian motives of investors, leading to a diminished level of satisfaction. Additionally, we reveal that the difficulties investors face in interacting with entrepreneurs and platforms, coupled with the challenges of presenting themselves as experts, supporters of valued projects, or successful crowdfunders, can hamper the expressive and emotional motives of investors, resulting in dissatisfaction. Such challenges have the potential to erode the future interest of equity crowdfunders in the platform, undermining the viability of equity crowdfunding as a funding source for entrepreneurial firms. Our framework offers valuable insights into the factors that shape the investment experience of equity crowdfunders, providing testable propositions and highlighting the importance of addressing the identified issues to ensure the long-term sustainability and success of equity crowdfunding as a funding avenue for entrepreneurial firms.
Research aim: The paper addressed two objectives: examining the differences in behavioural traits with regard to risk attitudes, and explore the differences in financial risk attitudes with regard to ...demographic profiles of Malaysian investors. Design/ Methodology/ Approach: Using the t-test and one-way analysis of variance (ANOVA), this paper investigates how differences in behavioural trait bias among 241 master of business administration students in Malaysia affect their financial risk attitudes. Research finding: First, we find that the financial risk takers have higher levels of overconfidence, maximization, happiness, and trust than the risk-averse respondents. Second, in terms of demographics, we find that the following take significantly higher risks: men versus women, singles versus those who are married, and, those with lower income and less work experience. Besides, in terms of race, the Chinese are the greatest financial risk takers. Theoretical contribution/ Originality: Both the behavioural traits and financial risk attitudes are new for a multicultural background market like Malaysia. Reflections on the findings suggest that the financial planners need to take cognisance of such relationships, tendencies and risk preferences so as to understand their client inclination and provide appropriate advice to their investor clients. Research limitation/ Implication: Categories under the research design and sample selection can be further extended by considering more advanced research approach and a bigger size of sample respondents. Keywords: Behavioural Finance, Behavioural Traits, Risk Attitudes, Financial Risk, Demographic Profiles Type of article: Research paper JEL Classifications: D14, D91, G41 Received: 31 January 2020 Revised: 15 April 2020, 24 April 2020 Accepted: 6 May 2020 Published online: 29 January 2021
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