International Journal For Multidisciplinary Research
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Volume 7 Issue 1
January-February 2025
Indexing Partners
The Impact of Investor Behaviour on Investment Decision Making in the Capital Market
Author(s) | SHAINY V.P., CLARET V. PEREIRA, V. BASIL HANS |
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Country | India |
Abstract | This paper explores the significant influence of investor behaviour on decision-making process within capital markets. The primary objective is to analyze how psychological factors, such as cognitive biases and emotional responses, affect investment choices and market outcomes. Specifically, we aim to identify key behavioural biases – such as loss aversion, over confidence and herding behaviour that distort rational decision making and contribute to market inefficiencies. By integrating theoretical frameworks from behavioral finance with empirical observations, this study seeks to provide a comprehensive understanding of the dynamics between investor psychology and capital market performance. The research methodology includes a review of existing literature and case studies that illustrate the consequences of irrational behaviour on market trends and asset pricing. This paper also aims to highlight the implications for individual investors, financial analysts and policy makers in developing strategies to mitigate the adverse effects of behavioural biases. Limitations of the study are the human biases in the selection of literature, as well as the challenge of generalizing findings across different market environments due to varying cultural and economic contexts. Additionally, while this paper discusses various behavioural biases, it does not exhaustively cover all possible influences on investor decision-making, leaving room for future research to explore unexamined factors. |
Keywords | Investor behaviour, decision making, psychological factors, behaviour finance |
Field | Business Administration |
Published In | Volume 7, Issue 1, January-February 2025 |
Published On | 2025-01-22 |
Cite This | The Impact of Investor Behaviour on Investment Decision Making in the Capital Market - SHAINY V.P., CLARET V. PEREIRA, V. BASIL HANS - IJFMR Volume 7, Issue 1, January-February 2025. DOI 10.36948/ijfmr.2025.v07i01.35478 |
DOI | https://doi.org/10.36948/ijfmr.2025.v07i01.35478 |
Short DOI | https://doi.org/g82wps |
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