Esther Ikavbo Evbayiro-Osagie, Michael Ify Chijuka

Department of Banking and Finance, Faculty of Management Sciences, University of Benin, Benin-City, Nigeria

Abstract: This study examines Behavioral Factors and Investment Decision Making in the Nigerian Stock Exchange (NSE). Thus, the research question is what are the psychological factors affecting investment decisions in the Nigerian capital market. A structured questionnaire was used in collecting data and it was able to collect data from 75 investors with the application of a convenient sampling method. Using overconfidence bias, availability bias, conservatism, and herding effect to define the most important behavioral element affecting investment decision making by investors in the Nigerian. Multiple regression analysis was used as the key methodological method for evaluating the research hypothesis, whereas the internal consistency of the questionnaire calculated from Cronbach’s alpha on all variables showed values greater than 0.7 with a sufficient level of reliability. The primary beneficiary group would be the buyers on the stock market who would be educated enough about the effect of their own behavioral influences on their stock market decision making. The knowledge would be useful in making optimal investment decisions and avoiding unfavorable decisions to increase their resources. In turn, it will be helpful to policymakers and stock market regulators to help them understand the position of behavioral influences inherited in consumer decision-making and that may be associated with the need for stock market brokers to update their customer’s trading practices to a higher level. The findings of this study suggest that overconfidence, availability bias, and herding impact demonstrated a positive significant relationship with NSE investment decision-making except conservatism which showed a negative relationship with investment decision-making but at 0.01 levels statistically significant. On the basis of the results, it can be generalized that the most prevalent factors affecting investor investment decision taking in NSE are overconfidence, availability bias, and herding influence.

 Keywords: Psychological Factors, Overconfidence Bias, Availability Bias, Conservatism, Herding Effect, Investment Decision, Nigerian Stock Exchange



Evbayiro-Osagie, E. I. and Chijuka, M.I., 2021. Psychological Factors and Investment Decisions in the Nigeria Capital Market. Oradea Journal of Business and Economics, 6(1), pp. 33-41.