The filed of behavioral finance is a field where human psychology is analyzed. Through the theories and concepts of
behavioral finance it is attempted to measure the impact of human emotions on the investment decisions.
In the old and classical concepts of finance the main focus was on the statistical factors and there is no
room for the psychological aspects.
But after the introduction of the behavioralfinance the peoples started to get
curious about it and they try to interpret the human behavior in different way. Now its easy for them to get
answers of rapid trading and irrational decision making. The main objective of this study to understand the
behavioral finance, and try to examine the perception of Pakistani investor about this field.
After
a detailed analysis of the previous work a comprehensive questionnaire is
prepare to collect data from the individual and institutional investors. Three
main factors are select for this study overconfidence,
over confirmation and the last one is the self control. And try to examine
there impact on the human perception. After the test, it was found that there
is a positive relation ship exists between the investor perception with overconfidence and over confirmation.
Because, it leads to increase the trading volume. And there is negative relationship existing between the
investor perception and the self control because it slows down the trading
activity. However the perception of Pakistani investor towards interpreting the
market events is still not change.
The major reason for that the lack of
education and knowledge and return on investments are still at the same levels.
But on the other hand the developed nations are implementing the theories of
behavioral finance very effectively and getting the higher rate of returns on
their investments. By better predicting the market movements.
Thus we should
also encourage this field to meet the modern finance requirements.
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