The impact of psychological factors on financial behaviour: A Systematic Literature Review

L'impact des facteurs psychologiques sur les comportements financiers: Une revue de littérature systématique

Noureddine Abdelbaki, Rajae Sabhi and Soumaya Outellou
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Noureddine Abdelbaki: UIT - Université Ibn Tofaïl
Rajae Sabhi: UIT - Université Ibn Tofaïl
Soumaya Outellou: UIT - Université Ibn Tofaïl

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Abstract: Traditional financial theory assumes that investors act rationally in an efficient market, while carefully analyzing the available information in order to make decisions. Therefore, the Efficient Market Hypothesis (EMH) extends this idea to competitive markets where players seek to maximize their profits without any individual influence on prices. However, behavioral finance arose from the inability of this theory to explain certain financial anomalies. Behavioral finance explores actual investor behavior, using social and cognitive psychology to reveal systematic errors and biases influencing investment decisions. It asserts that investors are prone to psychological biases that lead to irrational choices. Indeed, the objective of this article is to highlight the determinants that significantly influence the achievement of behavioral finance goals; while building on an in-depth analysis of previous research (Systematic Literature Review), which examines how cognitive biases and psychological influences affect investors' financial decisions.

Keywords: Classical finance efficiency behavioral finance behavioral bias decision; Classical finance; efficiency; behavioral finance; behavioral bias; decision (search for similar items in EconPapers)
Date: 2023-09-15
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Published in Revue Française d'Economie et de Gestion , 2023

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