THE ROLE AND PLACE OF BEHAVIORAL FINANCE TO FINANCE LITERATURE

Year 2021, Issue: 92, 42 - 48, 24.01.2022

Begaim Chotaeva Mustafa Koray Çetin

Abstract

Traditional and modern finance theories have not been able to explain why people did not always make rational decisions. Behavioral finance is a new field of finance, that recently attracting more attention and emerged from the view of human beings who do not always act rationally in their investment decisions. This paper aims to revise the discussion on behavioral finance as well as to outline its contribution to both finance and psychology. Moreover, it presents some principles of behavioral finance such as overconfidence and risk tolerance, and therefore contributes to the empirical studies in behavioral finance by using the SEM as (Structural Equation Modeling) approach.

Keywords

finance, behavioral finance, investment decision

РОЛЬ И МЕСТО ТЕОРИИ ПОВЕДЕНЧЕСКИХ ФИНАНСОВ В НАУЧНОЙ ЛИТЕРАТУРЕ

Abstract

Традиционные и современные теории финансов не могут объяснить, почему люди не всегда принимают рациональные решения. Поведенческие финансы – это новая область финансов, которая в последнее время привлекает все больше внимания и выходит из поля зрения людей, которые не всегда действуют рационально в своих инвестиционных решениях. Данная работа призвана заново поднять обсуждение теории поведенческих финансов, определить ее вклад в концепцию финансов, а также психологию. Кроме того, представлены некоторые принципы поведенческого финансирования, такие как чрезмерная самоуверенность и терпимость к риску, что способствует активизации эмпирических исследований в области поведенческих финансов с использованием подхода SEM (Моделирование Структурных Уравнений).

Keywords

финансы, поведенческие финансы, инвестиционное решение

References

• Grampp, W. Adam Smith and the Economic Man // Journal of Political Economy. – 1948. – No 56(4). – P. 317.
• Simon, H. A. A Behavioral Model of Rational Choice // The Quarterly Journal of Economics. – Oxford University Press, 1955. – Vol. 69(1). – P. 99-118.
• Samuelson, P. Risk and Uncertainty: A Fallacy of Large Numbers // Scientia. – 1963. – No 98. – P. 108-13.
• Slovic, P. Analysing the Expert Judge: A Study of a Stockbroker's Decision Process // Journal of Applied Psychology. – 1969. – No 53(4). – P. 255-263.
• Slovic, P. Psychological Study of Human judgment: Implications for Investment Decision Making // Journal of Finance. – 1972. – No 27(4). – P. 779-801.
• Kahneman, D., Slovic, P. and Tversky, A. Judgement Under Uncertainty: Heuristics and Biases. – Cambridge: Cambridge University Press, 1982.
• Kahneman, D. and Tversky, A. Prospect Theory: An Analysis of Decision under Risk // Econometrica. – 1979. – No 47(2). – P. 263-291.
• Shiller, R. J. Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends // American Economic Review. – 1981. – No 71. – P. 421-436.
• Shiller, R. J., Fischer, S. & Friedman, B. M. Stock Prices and Social Dynamics // Brookings Papers on Economic Activity. – 1984. – No. 2. – P. 457-510.
• Bondt, W. De and Thaler, R.H. Does the Stock Market Overreact? // Journal of Finance. – 1985. – No 40(3). – p. 793-808.
• Ricciardi, V. and Simon, H. What is Behavioral Finance? // The Business. Education and Technology Journal. – 2000. – No 2(1). – P. 26-34.
• Koutidis, D., ˇSevi, C. Z. and Chatzoglou, P. Investors’ Trading Activity: A Behavioural Perspective and Empirical Results // The Journal of Socio-Economics. – 2011. – No 40. – P. 548-557.
• Odean, T. Volume, Volatility, Price and Profit when all Traders are above Average // Journal of Finance. – 1998. – No 53(6). – P. 1887-1934.
• Barber, B. and Odean, T. The Courage of Misguided Convictions // Financial Analysts Journal. – 1999. – No 55. – P. 41-55.
• Lundeberg, M., Fox, P. and Punćochaŕ, J. Highly Confident but Wrong: Gender Differences and Similarities in Confidence Judgments // Journal of Educational Psychology. – 1994. – No 86. – P. 114-121.
• Barber, B. and Odean, T. Boys will be Boys: Gender, Overconfidence, and Common Stock Investment // Quarterly Journal of Economics. – 2001. – No 116. – P. 261-292.
• Grable, J. E. Financial Risk Tolerance and Additional Factors that Affect Risk Taking in Every Day Money Matters // Journal of Business and Psychology. – 2000. – No 14(4). – P. 625-630.
• Cordell, D. M. RiskPACK: How to Evaluate Risk Tolerance // Journal of Financial Planning. – 2001. – No 14. – P. 36-40.
• Grable, J. E. and Lytton, R. H. Assessing Financial Risk Tolerance: Do Demographic Socioeconomic and Attitudinal Factors Work? Relations and Human Development // Family Economics and Resource Management Biennial. – 1999. – No 3(1).
• Hirshleifer, D. Behavioral finance // Annual Review of Financial Economics. – 2015. – No 7. – P. 133-159.
• Iacobucci, D. Everything you Always Wanted to Know about SEM (Structural Equations Modeling) but were Afraid to ask // Journal of Consumer Psychology. – 2009. – No 19. – P. 673-680.
• Anderson, J. C. & Gerbing, D. W. Structural Equation Modeling in Practice: A Review and Recommended Two-Step Approach // Psychological Bulletin. – 1988. – Vol. 103, No. 3. – P. 411-423.
• Bollen, K. A. & Long, J. S. Testing Structural Equation Models. – California: SAGE Publications, 1993.
• Raykov, T. & George, M. A. A first Course in Structural Equation Modeling. – New Jersey: Mahwah. Erlbaum Associates, 2000.
• Westland, J. C. Structural Equation Models, from Paths to Networks. Studies in Systems. Decision and Control. 2nd ed. – Springer Nature Switzerland, 2019.
• Kafayat, A. Interrelationship of Biases: Effect Investment Decisions Ultimately”. Theoretical and Applied Economics. – 2014. – Vol. XXI, No. 6(595). – P. 85-110.
• Parveena, Sh., Sattia, Z. W., Subhan, Q. A. & Jamil, S. 2020 Exploring Market Overreaction, Investors’ Sentiments and Investment Decisions in an Emerging Stock Market // Borsa Istanbul Review. – 2020. – No 20-3. – P. 224-235.
• İslamoğlu, M., Apan, M. & Ayvali, A. Determination of Factors Affecting Individual Investor Behaviours: A Study on Bankers // International Journal of Economics and Financial Issues. – 2015. – No 5(2). – P. 531-543.
• Koutidis, D. Investors’ Trading Activity: A Behavioural Perspective: Phd thesis. – Glasgow Caledonian University, 2012.
• Lakshmi, P., Visalakshmi, V., Thamaraiselvan, N. & Senthilarasu, B. Assessing the Linkage of Behavioural Traits and Investment Decisions Using SEM Approach // Int. Journal of Economics and Management. – 2013. – No 7(2). – P. 221-24.
• Kiyilar, M. and Acar, O. Behavioural Finance and the Study of the Irrational Financial Choices of Credit Card Users // Annales Universitatis Apulensis Series Oeconomica. – 2009. – No 11(1). – P. 457-468.
• Ateş, A. Finansal Yatırımların Davranışsal Finans Açısından Değerlendirilmesi Üzerine Bir Araştırma: Doktora tezi. – Konya: Selçuk Üniversitesi Sosyal Bilimler Enstitüsü, 2007.
• Ede, M. Davranışsal Finans ve Bireysel Yatırımcı Davranışları Üzerine Ampirik Bir Uygulama: Yüksek Lisans Tezi. – Marmara Üniversitesi, Bankacılık ve Sigortacılık Enstitüsü, 2007. – S. 1-202.