Personality traits and behavioral biases of Indian financial professionals

H. Kent Baker · Sujata Kapoor · Tanu Khare

23 citations0/0 files storedReview of Behavioral Finance

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Decision-Making and Behavioral Economics Financial Markets and Investment Strategies Personality Traits and Psychology

Abstract

Purpose Financial professionals are increasingly important in the Indian financial system. Our study examines the association between the Big Five personality traits and Indian financial professionals' behavioral biases when making investment decisions. Design/methodology/approach After testing our questionnaire's reliability and validity, we used it to obtain the sample responses. We used multiple regression analysis and other statistical tools to identify the relationships between the Big Five personality traits and behavioral biases. Findings Our findings reveal a high level of extraversion and conscientiousness, a moderate level of agreeableness and openness and a low neuroticism level among financial professionals. The results show a significant association between neuroticism, extraversion, openness and all behavioral biases except anchoring bias. The neuroticism trait has a statistically significant relationship with all behavioral biases examined, whereas agreeableness and conscientiousness traits lack a significant association with behavioral biases. The openness trait is associated with many emotional biases and cognitive heuristics, while the extraversion trait has a significantly positive relationship with availability bias. Research limitations/implications Future researchers could analyze primary (survey) and secondary investor data from brokerage houses. Using a larger sample could provide more generalizable findings. Researchers could also consider other aspects of investment decision-making using various asset classes. Understanding financial professionals' personality traits and behavioral biases could help them develop strategies to suit client needs. Originality/value This study provides the first comprehensive examination of the association between personality traits and behavioral biases of Indian financial professionals.

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References

1974Judgment under Uncertainty: Heuristics and Biases 1998Investor Psychology and Security Market Under‐ and Overreactions 2011INDIVIDUAL RISK ATTITUDES: MEASUREMENT, DETERMINANTS, AND BEHAVIORAL CONSEQUENCES 1998Are Investors Reluctant to Realize Their Losses?1980Culture and Organizations 1999Home Bias at Home: Local Equity Preference in Domestic Portfolios 2005Personality Development: Stability and Change 1998Volume, Volatility, Price, and Profit When All Traders Are Above Average

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