Does personality and demographic variances of individual investors challenge the assumption of rationality? A two staged regression modeling-artificial neural network approach
DOI:
https://doi.org/10.36683/2306-1758/2022-3-41/34-47Keywords:
neuroticism, conscientiousness, demography, investment decisions, regression, ANN modelAbstract
Behavioral finance theory is considered as an alternate theory to traditional finance theories as it views investors normal and not rational. There are many factors that can influence the decisions making of investors, some of these factors has been researched extensively and some remains unexplored. The main focus of existing studies remained the behavioral biases. Apart from biases, personality traits also determine the investment behavior of investors which mainly remains unexplored. The main purpose of the present study is to examine the influence of personality traits and demographic variances on short-term and long-term investment decisions of individual investors in North India. The other aim of this study is the application of Artificial Neural Network modeling in the field of behavioral finance, which will assist the researchers in determining the investment behavior in more convenient way. The present study is quantitative in nature. For the fulfillment of the purpose, a survey was conducted among the individual investors in North India and data was collected from them through a structured questionnaire. Along with two regression models Artificial Neural Network model (ANN) was used to test the study hypothesis. Data was analyzed with the help of SPSS software package. Findings of the study revealed the significant positive impact of neuroticism on short-term investment decisions and the significant negative impact on long-term investment decisions. The role of conscientiousness in predicting the investment decisions was not found high. Also the least influence of demographic factors was found in determining both short-term and long- term investment decisions, which was also verified through the sensitivity analysis in the ANN model.Downloads
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