The Economics of Behavioral Finance and its Effects on Investment Decisions in Kurdistan Region of Iraq for the Period 2020-2022
##plugins.themes.bootstrap3.article.main##
پوختە
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.
##plugins.generic.usageStats.downloads##
##plugins.themes.bootstrap3.article.details##
سەرچاوەکان
References
Akhtar, F. and Das, N., (2019). Predictors of investment intention in Indian stock markets: Extending the theory of planned behaviour. International journal of bank marketing, 37(1), pp.97-119.DOI: https://doi.org/10.1108/IJBM-08-2017-0167
Al-Thaqeb, S.A. and Algharabali, B.G., (2019). Economic policy uncertainty: A literature review. The Journal of Economic Asymmetries, 20, p.e00133. DOI: https://doi.org/10.1016/j.jeca.2019.e00133
Baker, H.K., Kumar, S., Goyal, N. and Gaur, V., (2019). How financial literacy and demographic variables relate to behavioral biases. Managerial Finance, 45(1), pp.124-146. DOI: https://doi.org/10.1108/MF-01-2018-0003
Goyal, K. and Kumar, S., (2021). Financial literacy: A systematic review and bibliometric analysis. International Journal of Consumer Studies, 45(1), pp.80-105. DOI: https://doi.org/10.1111/ijcs.12605
Gurdgiev, C. and O’Loughlin, D., (2020). Herding and anchoring in cryptocurrency markets: Investor reaction to fear and uncertainty. Journal of Behavioral and Experimental Finance, 25, p.100271. DOI: https://doi.org/10.1016/j.jbef.2020.100271
Hastings, J. and Mitchell, O.S., (2020). How financial literacy and impatience shape retirement wealth and investment behaviors. Journal of Pension Economics & Finance, 19(1), pp.1-20. DOI: https://doi.org/10.1017/S1474747218000227
Hirshleifer, D., (2020). Presidential address: Social transmission bias in economics and finance. The Journal of Finance, 75(4), pp.1779-1831. DOI: https://doi.org/10.1111/jofi.12906
Kaiser, T., Lusardi, A., Menkhoff, L. and Urban, C., (2022). Financial education affects financial knowledge and downstream behaviors. Journal of Financial Economics, 145(2), pp.255-272. DOI: https://doi.org/10.1016/j.jfineco.2021.09.022
Kizys, R., Tzouvanas, P. and Donadelli, M., (2021). From COVID-19 herd immunity to investor herding in international stock markets: The role of government and regulatory restrictions. International Review of Financial Analysis, 74, p.101663. DOI: https://doi.org/10.1016/j.irfa.2021.101663
Konovalova, M.E., Kuzmina, O.Y. and Zhironkin, S.A., (2020). Digital technologies as a factor of expanding the investment opportunities of business entities. In Digital Age: Chances, Challenges and Future 7 (pp. 180-188). Springer International Publishing. DOI: https://doi.org/10.1007/978-3-030-27015-5_23
Lind, T., Ahmed, A., Skagerlund, K., Strömbäck, C., Västfjäll, D. and Tinghög, G., (2020). Competence, confidence, and gender: The role of objective and subjective financial knowledge in household finance. Journal of Family and Economic Issues, 41, pp.626-638. DOI: https://doi.org/10.1007/s10834-020-09678-9
Loxton, M., Truskett, R., Scarf, B., Sindone, L., Baldry, G. and Zhao, Y., (2020). Consumer behaviour during crises: Preliminary research on how coronavirus has manifested consumer panic buying, herd mentality, changing discretionary spending and the role of the media in influencing behaviour. Journal of risk and financial management, 13(8), p.166. DOI: https://doi.org/10.3390/jrfm13080166
Lusardi, A., (2019). Financial literacy and the need for financial education: evidence and implications. Swiss Journal of Economics and Statistics, 155(1), pp.1-8. DOI: https://doi.org/10.1186/s41937-019-0027-5
Metawa, N., Hassan, M.K., Metawa, S. and Safa, M.F., (2019). Impact of behavioral factors on investors’ financial decisions: case of the Egyptian stock market. International Journal of Islamic and Middle Eastern Finance and Management, 12(1), pp.30-55. DOI: https://doi.org/10.1108/IMEFM-12-2017-0333
Padhan, R. and Prabheesh, K.P., (2021). The economics of COVID-19 pandemic: A survey. Economic analysis and policy, 70, pp.220-237. DOI: https://doi.org/10.1016/j.eap.2021.02.012
Panos, G.A. and Wilson, J.O., (2020). Financial literacy and responsible finance in the FinTech era: capabilities and challenges. The European Journal of Finance, 26(4-5), pp.297-301. DOI: https://doi.org/10.1080/1351847X.2020.1717569
Rai, K., Dua, S. and Yadav, M., (2019). Association of financial attitude, financial behaviour and financial knowledge towards financial literacy: A structural equation modeling approach. FIIB Business Review, 8(1), pp.51-60. DOI: https://doi.org/10.1177/2319714519826651
Roychowdhury, S., Shroff, N. and Verdi, R.S., (2019). The effects of financial reporting and disclosure on corporate investment: A review. Journal of Accounting and Economics, 68(2-3), p.101246. DOI: https://doi.org/10.1016/j.jacceco.2019.101246
Ruggeri, K., Alí, S., Berge, M.L., Bertoldo, G., Bjørndal, L.D., Cortijos-Bernabeu, A., Davison, C., Demić, E., Esteban-Serna, C., Friedemann, M. and Gibson, S.P., (2020). Replicating patterns of prospect theory for decision under risk. Nature human behaviour, 4(6), pp.622-633. DOI: https://doi.org/10.1038/s41562-020-0886-x
Talwar, M., Talwar, S., Kaur, P., Tripathy, N. and Dhir, A., (2021). Has financial attitude impacted the trading activity of retail investors during the COVID-19 pandemic?. Journal of Retailing and Consumer Services, 58, p.102341. DOI: https://doi.org/10.1016/j.jretconser.2020.102341
Usman, D.I. and Pam, M., (2019). Effect of Disposition Effect on Investment Decision Making in Property Market in Plateau State, Nigeria. In Examining the Social and Economic Impacts of Conflict-Induced Migration (pp. 83-98). IGI Global. DOI: https://doi.org/10.4018/978-1-5225-7615-0.ch005
Wai, K., Dastane, D.O., Johari, Z. and Ismail, N.B., (2019). Perceived risk factors affecting consumers’ online shopping behaviour. The Journal of Asian Finance, Economics and Business, 6(4), pp.246-260. DOI: http://dx.doi.org/10.2139/ssrn.3498766
Xiao, J.J. and Porto, N., (2019). Present bias and financial behavior. Financial Planning Review, 2(2), p.e1048. DOI: https://doi.org/10.1002/cfp2.1048
Yarovaya, L., Matkovskyy, R. and Jalan, A., (2021). The effects of a “black swan” event (COVID-19) on herding behavior in cryptocurrency markets. Journal of International Financial Markets, Institutions and Money, 75, p.101321. DOI: https://doi.org/10.1016/j.intfin.2021.101321
Yue, P., Gizem Korkmaz, A. and Zhou, H., (2020). Household financial decision making amidst the COVID-19 pandemic. Emerging Markets Finance and Trade, 56(10), pp.2363-2377. DOI: https://doi.org/10.1080/1540496X.2020.1784717