JOURNAL REVIEW:

EXPLORING THE INFLUENCE ASPECTS ON STOCK INVESTMENT

DECISION-MAKING: A STUDY ON BANGLADESHI INDIVIDUAL
INVESTORS
Authors: Tanzina Hossain and Pallabi Siddiqua (2022)

The research explores how behavioral finance influences stock investment

choices among individual investors at the Dhaka Stock Exchange (DSE) in Bangladesh.
By surveying 281 investors, the study examines the effects of behavioral factors such as
loss aversion, overconfidence, risk perception, and herding on their investment
decisions.

1. Loss Aversion: The study finds that loss aversion significantly affects investment
decisions, showing that investors are more inclined to avoid losses than pursue
gains. This indicates a risk-averse tendency, where decisions are driven more by
fear of losses than by potential gains.
2. Overconfidence: Overconfidence has a moderate impact, suggesting that
investors often overestimate their abilities and base their decisions on this
overconfidence. This can result in poor investment choices and increased risk-
taking.
3. Risk Perception: Risk perception also has a substantial impact on investment
decisions, highlighting that investors are heavily influenced by their risk
assessments. Consequently, they might avoid investments perceived as high-risk,
despite potential gains.
4. Herding: Herding exerts a low impact on investment decisions, indicating that
investors are somewhat inclined to follow others' actions rather than making
independent choices. This behavior can contribute to market inefficiencies and
increased volatility.

The survey incorporated questions related to these behavioral factors, and the
collected data was analyzed using statistical methods such as chi-square tests and
paired-samples t-tests to evaluate the significance of these factors on investment
decisions.
 Conclusion

Behavioral finance studies how psychological biases influence financial decisions.

Gachter et al. (2010) highlighted these biases' impact on investment choices and market
prices. Understanding and managing these biases can help investors develop more
effective strategies, though challenges like small sample sizes and biased responses
require further study for a complete understanding.

Reference:

https://www.emerald.com/insight/2399-1747.htm

DOI 10.1108/PRR-10-2021-0054
 JOURNAL REVIEW:
Modelling the Theory of Planned behaviour to evaluate the investment
intention of generation Z in the speculative market: stocks, Forex and
cryptocurrencies
Authors: Vaidehi Pandurugan and Badriya Nasser Said Al Shammakhi (2023)

The study aimed to investigate the relationship between financial literacy,

subjective norms, and perceived behavioral control on the intention to invest among
Generation Z. The researchers used the Theory of Planned Behavior (TPB) as the
theoretical framework and employed structural equation modeling to analyze the data.

1. Data Collection: The study collected data from 276 respondents, with 251
responses used for the final analysis after removing outliers.
2. Model Development: The researchers developed a model using the TPB, which
includes attitude, subjective norm, perceived behavioral control, and financial
literacy as predictors of intention to invest.
3. Model Evaluation: The model was evaluated using various fit indices, including the
goodness-of-fit test, Cronbach’s alpha, and modification indices. The results
indicated that the model fit the data well and that the constructs were reliable.

Key Points

1. Direct Effects: The results showed that attitude, subjective norm, and perceived
behavioral control all had significant direct effects on intention to invest.
2. Indirect Effects: Financial literacy was found to have a significant indirect effect
on intention to invest, mediated by subjective norm and perceived behavioral
control.
3. Mediation Analysis: The study found that financial literacy significantly mediated
the relationship between subjective norm and intention to invest, but not between
attitude and intention to invest.

Conclusion

The study concluded that financial literacy plays a crucial role in influencing the
intention to invest among Generation Z, particularly through its indirect effect on
subjective norms and perceived behavioral control. The findings suggest that financial
literacy should be emphasized in investment-related training and education to enhance
the investment decisions of this generation.

Recommendations and Limitations

 1. Financial Literacy Training: Educational institutions should prioritize financial
literacy training to equip Generation Z with the necessary knowledge and skills to
make informed investment decisions.
2. Subjective Norms: It is essential to understand and address the norms and beliefs
that shape investment decisions among this generation.
3. Perceived Behavioral Control: Individuals should feel confident in their ability to
make investment decisions and that barriers to investment should be minimized.
4. Sample Size: The sample size of 251 respondents might be considered relatively
small, which could impact the generalizability of the findings.
5. Data Collection: Relied on self-reported data, which may be subject to biases and
limitations.

Reference:

https://www.emerald.com/insight/1985-9899.htm

DOI 10.1108/AGJSR-07-2023-0319
 JOURNAL REVIEW:
Financial Literacy or Investment Experience: Which is More Influential
in Cryptocurrency Investment?
Authors: Haidong Zhao and Lini Zhang (2021)

The article "Financial Literacy or Investment Experience More Influential in Crypto

Investment" by Zhao et al. examines the relationship between financial literacy and
investment experience in cryptocurrency investments. The study uses a dataset of 1,000
respondents and employs a regression analysis to identify the factors that influence
cryptocurrency investment decisions.

Key Points

1. Financial Literacy: financial literacy has a significant positive impact on

cryptocurrency investment decisions. Individuals with higher financial literacy are
more likely to invest in cryptocurrencies.
2. Investment Experience: The analysis also reveals that investment experience
plays a crucial role in cryptocurrency investments. Those with more investment
experience are more likely to invest in cryptocurrencies.
3. Demographic Factors: The study controls for demographic factors such as age,
education, employment status, and family status. The results show that these
factors do not significantly influence cryptocurrency investment decisions.
4. Theoretical framework: Based on the social cognitive theory, this study focuses on
exploring and examining the factors determining consumers’ cryptocurrency
investment. behavioral and environmental factors shape whether a person will
engage in specific behavior and why a person engages in that behavior.
5. Methodology: The 2018 NFCS Investor Survey was used for data analysis in this
study. The survey was administered and funded by the Financial Industry
Regulatory Authority Investor Education Foundation to 2,000 individual investors
who had investments outside of retirement accounts and had primary or shared
decision-making responsibility for their households’ investments.
6. Data analysis: Three hierarchical logistic regression models were built following a
model-comparison approach to examine the additional influence of financial
 literacy and investment experience over previously investigated risk-related
factors, socioeconomic status and demographics

Conclusion

The study concludes that both financial literacy and investment experience are
important factors in cryptocurrency investment decisions. Financial literacy helps
individuals understand the risks and benefits of cryptocurrency investments, while
investment experience provides a sense of familiarity and confidence in the investment
process. The findings suggest that policymakers and financial institutions should focus
on improving financial literacy and providing investment education to enhance the overall
financial well-being of individuals and promote responsible cryptocurrency investment
practices.

Reference:

https://www.emerald.com/insight/0265-2323.htm

DOI 10.1108/IJBM-11-2020-0552
 JOURNAL REVIEW:
Prioritizing Intentions Behind Investments in Cryptocurrency: A Fuzzy
Analytical Framework
Authors: Swati Gupta and Sanjay Gupta; Manoj Mathew; Hanumantha Rao Sama
(2020)

The article contributes to the literature by applying fuzzy logic to analyze the
multifaceted intentions driving cryptocurrency investments. This methodological
approach offers a nuanced understanding of how different factors influence investment
decisions in a volatile and rapidly evolving market. By prioritizing intentions, the
framework could assist investors, regulators, and policymakers in navigating the
complexities of cryptocurrency investments more effectively.

Key Points:

1. Performance Expectancy: The extent to which a user anticipates the lucrativeness

of using a particular technology has been characterized as performance
expectancy. The expectation in terms of performance of digital currency includes
the faith that transactions are done through technology will be prompt and secure.
2. Social Influence: Any change caused in the behavior of an individual through peer
pressure, leadership, socialization, etc. is termed as SI. SI as the extent to which
society encourages an individual to use a particular technology. Previous research
has witnessed that the speculative nature of cryptocurrency has increased the
role of peer pressure.
3. Facilitating Conditions: Facilitating conditions have been defined as the extent of
support provided for the use of a particular technology. The support can be in the
form of adequate training required to operate the technology. Facilitating
conditions have a positive effect only in developed nations because of the
availability of advanced infrastructure with them. But in the case of developing
countries like India, lack of infrastructure acts as an obstacle in adopting new
technology.
4. Financial Literacy: Financial literacy has been demarcated as a mixture of
acquaintance, understanding, attitude and the behavior which is necessary to
 make comprehensive financial decisions and achieve a state of financial well-
being. financial literacy is extensively affected by the earning capacity, edification
and profession of an individual. It has been observed that having financial literacy
about various investment alternates gives an Investment in cryptocurrency
impetus to an individual to invest.
5. Perceived usefulness: When a particular system gives a perception to an
individual that its usage will automatically enhance his performance, he/she is
bound to adopt it. This impression in the mind of the user is known as perceived
usefulness. Perceived usefulness is a stronger motivator than ease of use while
deciding about the adoption of new technology.
6. Perceived Trust: Trust is a willingness to depend upon something/someone
assuming it to be reliable. Perceived trust can be defined as the faith or confidence
in a system that will perform all the activities as expected from it. Perceived trust
is a positive indicator of the use of the cryptocurrency method of payment also.

Conclusion

The present work prioritizes the intentions behind investment in cryptocurrency

using a framework that uses the FAHP. Total eight criteria like SI, financial literacy,
facilitating conditions, performance expectancy, EE, perceived trust, perceived
usefulness and social support, along with 28 subcriteria were used as a parameter to
know the intentions behind investment in cryptocurrency. Therefore, our sample is
limited to only a specific number of an infinite universe. Future researchers may take a
greater number of respondents belonging to different backgrounds to have a wide view
regarding investment behavior. Hence, future research is needed to explore other
parameters in order to better understand the adoption of cryptocurrency in society.

References:

https://www.emerald.com/insight/0144-3585.htm

DOI 10.1108/JES-06-2020-0285