Behavioral biases, financial literacy, and investment decision: A case of individual investors in Pakistan

Authors

Arslan Saleem, Hailey College of Commerce, University of Punjab, LahoreFollow
Muhammad Usman, Hailey College of Commerce, University of Punjab, LahoreFollow
Zahid Bashir, Department of Commerce, University of Gujrat, PakistanFollow

Abstract

This research dives into the interesting world of investment choices and analyses the influence that behavioural biases and financial literacy play in the process. The study uncovers the direct impact of behavioural biases such as anchoring, optimism bias, and loss aversion on investment decisions by using primary data from individual investors in the Lahore region. These individuals participated in the study. According to the findings of the study, having a solid understanding of finance can help mitigate the effects of cognitive biases and lessen the toll they take on investment choices. The study underscores the necessity for future research on this problem across Pakistan and the inclusion of institutional investors, despite the fact that the only investors polled were individual investors in Lahore. This study fills a vacuum in the literature and gives insight on how the stock market is affected by the behaviour of investors.

Keywords

Behavioral Biases, Investment Decisions, Individual Investors, Financial Literacy

DOI

https://doi.org/10.54784/1990-6587.1535

Journal of Economic Literature Subject Codes

G2, G4

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Recommended Citation

Saleem, A., Usman, M., & Bashir, Z. (2023). Behavioral biases, financial literacy, and investment decision: A case of individual investors in Pakistan. Business Review, 18(2), 1-19. Retrieved from https://doi.org/10.54784/1990-6587.1535