Impact of Behavioral Finance on Investor Decision Making: A Case of PSX

Abstract

This paper investigates the impact of behavioral finance on investor decision making in the Stock exchange of Pakistan (PSX). In this paper, the model that have been made on the basis of behavioral finance and its impact on investor decision making. This research proposes a model that shows the impact of behavioral finance on investor decision making in the stock exchange of Pakistan. The approach used in this research is quantitative and used to support the theoretical model with the help of online survey. The results of all the items used in the questionnaire are analyzed with the SPSS methodology (considered credible source for exploratory research). The results drawn from 300 respondents presents that behavioral finance do affect the investor decision making in the stock market of Pakistan significantly. Furthermore, the research imply that economists can make use of investment by the investors by considering the behavioral finance that are joint to obtain the affective outputs. This study also has some limitations of time constraint, limited sample and targeted variables, but it enables further researchers a platform for future studies. The research also demonstrates the ideal features of behavioral finance in order to check its impact on investor decision making in the stock market of Pakistan