The Influence of Overconfidence Bias, Herding Effect, and Loss Aversion on Investment Decisions in The Capital Market with Financial Literacy as A Moderating Variable

Firmansyah Firmansyah

11 citations0/0 files storedJournal of Business Management Review

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Financial Literacy and Behavior Financial Markets and Investment Strategies Decision-Making and Behavioral Economics

Abstract

This study aims to examine the effect of overconfidence bias, herding effect, and loss aversion on investment decisions in the capital market with financial literacy as a moderating variable study on Generation Z novice investors in Malang. Sample determination is used by the accidental sampling method. The research data sources came from observations, interviews and questionnaires. Data analysis using the SEM-PLS approach with WarpPLS 7.0 software. The results showed that overconfidence bias, herding effect, and loss aversion had a positive and significant effect on investment decisions. Financial literacy can moderate the effect of overconfidence bias, and loss aversion on investment decisions. Financial literacy cannot moderate the influence of the herding effect on investment decisions.

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2010Financial Literacy Explicated: The Case for a Clearer Definition in an Increasingly Complex Economy 2017A strategic framework for a profitable business model in the sharing economy 2017Financial literacy among youth 2012Behavioral Finance and Wealth Management 2016The Impact of Psychological Factors on Investors’ Decision Making in Malaysian Stock Market: A Case of Klang Valley and Pahang 2020Overconfidence heuristic-driven bias in investment decision-making and performance: mediating effects of risk perception and moderating effects of financial literacy 2016Does financial development reduce income inequality and poverty? Evidence from emerging countries 2021How financial literacy moderate the association between behaviour biases and investment decision?

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