A STUDY OF BEHAVIOURAL FINANCE DETERMINING FACTORS AND THE MODERATING EFFECT OF LOCUS OF CONTROL ON INDIVIDUAL INVESTORS INVESTMENT DECISIONS
Abstract
Purpose - The locus of control moderate’s the overconfidence bias and availability bias in investment decisions, which have positively impacted individual investors' decisions. The paper intends to study the behavioural determinants of overconfidence and availability biases in individual investors' investment decisions.
Design/Methodology/Approach - The relationship was assessed by distributing a questionnaire and collecting empirical data from investors about their perceptions of these biases via self-administered questionnaires from Stoke Exchange and other brokerage firms. The data was collected for a total of 146 individual investor respondents in this survey. This article used Regression analysis, chi-square, and descriptive techniques to examine the data.
Findings - The objectives of this article were to determine whether investors’ investment decisions are impacted by overconfidence bias and availability bias, as well as the moderating impact of locus of control in influencing individual investors’ investment decisions. This study explores the causal effects of economic behaviour on their own investment decisions of investors.
Research implications -The study, the LOC suggestively changes the association between Overconfidence bias and availability bias of investment decisions. Overconfidence bias is the most common judgment bias, while Availability bias is the availability of information that significantly impacts investment decision-making. Optimized decisions are intended to be made by prudent and knowledgeable investors. The positive and strong parameter of the model is significant.
Originality/value - The most important idea is that individual investors consider behavioural aspects (overconfidence and availability bias) when making investment decisions, and this paper concludes these factors play a vital part in their decisions.
Keywords: Behavioural finance, Overconfidence Bias, Availability Bias, Investment Decision, Locus of Control (LOC).
