Neurofinance: the new world of finance based on human psychology and individual investment behaviour

Abstract

Neurofinance is an emerging discipline in the area of behavioural finance. As the word neurofinance covers multi-disciplinary fields like neurology, psychology and finance it is a tool for understanding an individual’s behaviour towards financial activity done through brain mapping. When it comes to financial or investment decisions made by an individual it is said to be cognitive as well as baised being executed by neural process. It becomes necessary to understand the psychological factors behind the origin of this biasness. The concept of neurofinance which has developed out of neuroeconomics has become the base for recent studies on behavioural finance that explains the relationship between financial behaviour and human brain activities. Thus, this paper constructs the concept of neurofinance as an emerging key by demonstrating available studies done by different researchers and authors. This study is largely based on secondary sources of data making it a research based on conceptual analysis. It is expected that this study will nurture the further empirical researches done for analyzing individual’s investment behaviour and decision, with the concern of building and exploring Neurofinance as a foundation in the field of behavioural finance researches.

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