The objectives of the study are to determine the psychological factors which play an important role behind the
individual investors’ bias, in order to understand the influences of the individual investors’ bias, which can help the individual investors to avoid pitfalls while making investment decisions, and to create a literature on the research field of neurofinance.
Investors’ bias plays an important role in investment decision making because the bias is the combination of emotional and psychological factors which make the investor not to rely on the available information which certainly leads the investor to the irrational manner towards the investment decision making. Finance also looks at the investors and notes that they are not behaving according to the theories like prospect theory. A new trend in the finance, which is certainly in an embryonic stage and is termed as“Neurofinance”.
Neurofinance is the mixture of finance, psychology and neurosciences. Neurofinance uses the insights of psychology such as knowledge about the bias to understand and possibly correct mistakes committed by the individual investor towards their investment decision making. It tries to make sense of the facts on the investors’ bias towards investment decision making which indeed makes them behave irrational towards investment decision making.
Table of Contents
CHAPTER-I
INTRODUCTION
CHAPTER-II
INDUSTRY PROFILE
&
COMPANY PROFILE
CHAPTER -III
REVIEW OF LITERATURE
CHAPTER-IV
DATA ANALYSIS
AND
DATA INTERPRETATION
CHAPTER-V
FINDINGS, SUGESSTIONS AND CONCLUSIONS
Research Objectives and Core Themes
The study aims to investigate the influence of psychological biases on the investment decision-making process of individuals, specifically within the context of the National Small Industries Corporation (NSIC) Ltd. By applying the emerging field of neurofinance, the research seeks to understand why investors frequently deviate from rational behavior and to identify the emotional and cognitive factors that lead to suboptimal financial outcomes.
- Psychological biases in financial decision-making
- Application of neurofinance to investor behavior
- Empirical analysis of investor rationality
- Role of demographic and socioeconomic factors in investment
- Strategies for optimizing investment decision processes
Excerpt from the Book
1.1 .Introduction to the study:
Finance is the study of money and money market which includes anything from the interest rate on the saving account to stock market to the impact of new tax laws on a country. Finance has given us a means of analyzing financial products such as stocks, bonds and derivatives. Finance actually deals with investment.
Employment of the funds with an aim of getting returns on it. This activity is generally termed as investment. The investment of hard earned money is the decisive activity of every human being. The investment is the combination of the funds which have been saved from the current consumption with the hope that some benefits will be received in future. Thus it is a reward for waiting for money.
Investments are important because in today’s world, just earning money is not enough. You work hard for the money you earn. But that may not be adequate for you to lead a comfortable lifestyle or fulfill your dreams and goals. To do that, you need to make your money work hard for you as well. This is why we invest. Money lying idle in your bank account is an opportunity lost. You should invest that money smartly to get good returns out of it.
Summary of Chapters
CHAPTER-I INTRODUCTION: This chapter introduces the study of finance and investment, highlighting the importance of rational decision-making and the prevalence of investor bias.
CHAPTER-II INDUSTRY PROFILE & COMPANY PROFILE: This section provides an overview of the MSME sector in India and a detailed profile of the National Small Industries Corporation (NSIC) Ltd.
CHAPTER -III REVIEW OF LITERATURE: This chapter reviews various academic studies and theoretical frameworks concerning behavioral finance, neurofinance, and psychological biases affecting investment.
CHAPTER-IV DATA ANALYSIS AND DATA INTERPRETATION: This chapter presents the empirical data gathered from survey respondents, visualized through charts and analyzed to understand investor behavior.
CHAPTER-V FINDINGS, SUGESSTIONS AND CONCLUSIONS: This chapter synthesizes the research findings, offers practical suggestions for investors, and concludes on the role of neurofinance in understanding investor irrationality.
Keywords
Neurofinance, Investor Bias, Behavioral Finance, Investment Decision Making, MSME, Rationality, Prospect Theory, Psychological Factors, Financial Markets, NSIC Ltd, Risk Aversion, Confirmation Bias, Portfolio Management.
Frequently Asked Questions
What is the primary focus of this research?
The work primarily focuses on examining the irrational behavior of individual investors and how their investment decisions are clouded by various psychological biases, analyzed through the lens of neurofinance.
Which specific areas are covered in the thematic analysis?
The core themes include the impact of cognitive biases (such as confirmation, anchoring, and loss aversion), the role of demographic variables, and the application of neuroscientific insights to understand financial decision-making.
What is the central research question?
The central question is how and why individual investors deviate from rational investment strategies and how these deviations can be understood or corrected using the emerging concept of neurofinance.
Which scientific methodology is employed?
The research uses a descriptive research design, gathering primary data via structured questionnaires distributed among 200 employees/investors at NSIC Ltd, combined with secondary data analysis from existing literature.
What is addressed in the main body of the text?
The main body covers the theoretical foundations of behavioral finance, a detailed industry and company profile, the presentation and statistical analysis of survey data, and a literature review on existing theories of investor bias.
Which keywords best characterize this work?
The study is best characterized by keywords such as Neurofinance, Investor Bias, Behavioral Finance, and Decision-Making.
How does the study define the role of NSIC Ltd in the research?
NSIC Ltd serves as the specific case study environment where the primary data for the research on individual investor bias was collected.
What are the practical implications for investment advisory services?
The study suggests that by understanding these biases, advisors can develop better strategies to assist clients in achieving wealth maximization and avoiding common cognitive pitfalls.
- Citar trabajo
- Vara Lakshmi Thavva (Autor), 2020, A Study on Individual Investors' Bias towards Investment Decision Making through the Concept of Neurofinance in NSIC Ltd., Múnich, GRIN Verlag, https://www.grin.com/document/1034592
