Effect of Behavioral Biases and Financial Literacy on Investors’ Investment Decision-making in Kerala, India

N Venkatesa Palanichamy, M Santhosh Kumar and Kalpana M
Additional contact information
N Venkatesa Palanichamy: Agricultural College and Research Institute, TNAU, Coimbatore, India.
M Santhosh Kumar: Agricultural College and Research Institute, TNAU, Coimbatore, India.
Kalpana M: Agricultural College and Research Institute, TNAU, Coimbatore, India.

Post-Print from HAL

Abstract: The effect of behavioral biases and financial literacy on investment decision-making among individual investors in the Bombay Stock Exchange and National Stock Exchange were investigated in this research. The study explores the relationships between behavioral biases such as herding, overconfidence, and anchoring, and market anomalies, including fundamental and technical anomalies. Utilizing a structured questionnaire with a sample size of 220 and employed structural equation modeling (SEM) using AMOS, to evaluate the hypotheses outlined in conceptual framework. The findings reveal significant associations between these biases and anomalies, highlighting their substantial influence on investment decisions. Notably, herding bias (HB) and anchoring bias (AB) positively influence both fundamental anomalies (FA) and technical anomalies (TA), while overconfidence bias (OB) negatively impacts fundamental anomalies (FA). Moreover, financial literacy is identified as a crucial moderator, affecting the decision-making process. While limitations exist, such as potential biases in data collection, the study underscores the importance of addressing behavioral biases and enhancing financial literacy to promote informed investment strategies and market stability. These findings contribute to enhancing financial knowledge and market efficiency.

Date: 2024-04-19
References: Add references at CitEc
Citations:

Published in Advances in Research on Teaching, 2024, 25 (3), pp.213-226. ⟨10.9734/air/2024/v25i31066⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05082824

DOI: 10.9734/air/2024/v25i31066

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().