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Factors Explaining the Market Discipline of Sharia Mutual Funds from a Behavioural Finance Perspective: A Theoretical Approach

Umi Widyastuti, Erie Febrian, Sutisna and Tettet Fitrijanti

International Journal of Economics & Business Administration (IJEBA), 2019, vol. VII, issue 3, 198-212

Abstract: Purpose: This paper aims to develop propositions about the antecedents of market discipline of Sharia mutual funds. Design/Methodology/Approach: This paper elaborates some scholars, which have applied Theory of Planned Behaviour to predict financial behavior, for developing the propositions. Findings: This paper define market discipline of Sharia mutual funds as withdrawal behaviour that reflects investor sensitivity to excessive risks taken by fund managers from a behavioral perspective, that could be affected by pscyhological and social factors. Practical Implications: This paper proposes certain variables which can be employed as the determinants of market discipline, including Islamic financial literacy, financial risk tolerance, attitude towards withdrawal, subjective norms, perceived behavioural control and withdrawal intentions. Originality/Value: This paper fill a lack of studies which discuss market discipline from the perspective of behavioural finance.

Keywords: market discipline; attitude towards withdrawal; subjective norm; perceived behavioral control; withdrawal intention; Sharia mutual funds. (search for similar items in EconPapers)
JEL-codes: G21 G23 G32 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:ers:ijebaa:v:vii:y:2019:i:3:p:198-212