Authors : Abdul Kerim; Omale Sunday; Iyodo Baba Yaro; John Alaji

Volume/Issue : Volume 10 - 2025, Issue 1 - January

Google Scholar : https://tinyurl.com/42xzbcyz

Scribd : https://tinyurl.com/mv2k4apa

DOI : https://doi.org/10.5281/zenodo.14737800

Abstract : This research explores the impact of behavioral finance on investors' decision-making within the Nigerian Stock Exchange, focusing on overconfidence, herding, and blue-chip stock preferences as key behavioral variables. 350 questionnaires were distributed to respondents, with 340 valid responses representing a 90% retrieval rate. The data collected were analyzed using multiple regression analysis with the aid of Stata 2023 to assess how these behavioral factors impact investment decisions. Overconfidence was evaluated to understand its effect on trading volume and stock selection. Herding behavior was analyzed to explore investors' propensity to follow the crowd, potentially leading to market inefficiencies. The preference for blue-chip stocks was examined to determine its impact on portfolio diversification and risk management. The findings of this study aim to provide insights into the psychological drivers of investor behavior in emerging markets, with implications for financial education and policy-making to enhance informed decision-making processes. The study recommends that both institutional and individual investors be educated about the various Behavioral factors, such as overconfidence and herding, that can influence their investment decision-making processes.

Keywords : Behavioral Finance, Decision-Making Overconfidence, Herding and Blue-Chip.

References :

1. Almansour, B. Y., & Arabyat, Y. A. (2017). Investment Decision Making Among Gulf Investors: Behavioral Finance Perspective. International Journal of Management Studies, 24(1), 41–71. https://doi.org/10.32890/ijms.24.1.2017.10476
2. Alquraan, T., Alqisie, A., & Al Shorafa, A. (2023). Do Behavioral Finance Factors Influence Stock Investment Decision of Individual Investors: Evidence from Saudi Stock Market. American International Journal of Contemporary Research, 6(3), 159–169.
3. Baker, F. & N. (2019). Behavioral finance: what everyone needs to know. Oxford University Press., 4(3), 450–457.
4. Bogunjoko, A. (2021). Impact of Behavioral Finance on Investment Decisions Investigation into How Psychological Factors Affect Investment Decisions Among Millennial Investors in Nigeria. August, 1–57.
5. Budhiraja, K., Raman, T. V., & Bhardwaj, G. N. (2018). Impact of behavioral finance in investment decision making. International Journal of Civil Engineering and Technology, 9(6), 1151–1157.
6. Chaudhary, A. K. (2016). Impact of Behavioral Finance in Investment Decisions and Strategies - A Fres Approach. Internation Journal of Management Research and Business Strategy, 46(1), 211–225. https://doi.org/10.1007/s12526-015-0353-5
7. Elessa, M. S., & Yassin, A. A. (2023a). Behavioral Finance Moving Forward. Journal of Accounting and Finance, 2(5), 45–59.
8. Elessa, M. S., & Yassin, A. A. (2023b). Behavioral Financial Factors and their Impact on Investment Decisions Quality: the Mediating Role of Rationality. Information Sciences Letters, 12(6), 2335–2342. https://doi.org/10.18576/isl/120610
9. Ganesh, P. & N. (2024). A Study of Behavioral Finance on Investment Decisions Among Individual Investors Personalities and Investment Choices in Ben (pp. 456–465).
10. Gao, S., & Gao, J. (2016). Earnings Management: A Literature Review. 75(Seiem), 189–192. https://doi.org/10.2991/seiem-16.2016.48
11. Gawande, S., Memon, S. A., & Yadav, A. (2023). An Impact of Behavioral Finance on Investment Decisions: an Overview Study. Journal of the Asiatic Society of Mumbai, 97(9), 21–29.
12. GOYAL, S. (2020). Impact of Behavioral Finance on Portfolio Investment Decisions.
13. Guillaume D. (2020). How-Behavioural-Finance-Impacts-Individual-Investors-Decisions-and-Strategies. 1(2), 2–88.
14. Junianto, Y., & Kohardinata, C. (2021). Financial Literacy Effect and Fintech in Investment Decision Making. Primanomics : Jurnal Ekonomi & Bisnis, 19(1), 168. https://doi.org/10.31253/pe.v19i1.515
15. K Arjun Goud, Dr. K. V. R. Satya Kumar, & Dr. P.Chakradhar. (2024). a Study on Behavioral Finance and Its Impact on Decision Making of an Investment. EPRA International Journal of Economics, Business and Management Studies, March, 104–115. https://doi.org/10.36713/epra16186
16. Khilar, R. P., & Singh, S. (2020). Role of emotional bias on investment decision from a behavioral finance perspective. International Journal of Scientific and Technology Research, 9(3), 3457–3460.
17. Nareswari, N., Salsabila Balqista, A., & Priyo Negoro, N. (2021). The Impact of Behavioral Aspects on Investment Decision Making. Jurnal Manajemen Dan Keuangan, 10(1), 15–27. https://doi.org/10.33059/jmk.v10i1.3125
18. Nkukpornu, E., Gyimah, P., & Sakyiwaa, L. (2020). Behavioral Finance and Investment Decisions: Does Behavioral Bias Matter? International Business Research, 13(11), 65. https://doi.org/10.5539/ibr.v13n11p65
19. Ogunlusi, O. E., & Obademi, O. (2021). The Impact of Behavioural Finance on Investment Decision-making: A Study of Selected Investment Banks in Nigeria. Global Business Review, 22(6), 1345–1361. https://doi.org/10.1177/0972150919851388
20. Oshobuye, F. B. (2024). Behavioral Finance Factors and Investors Decisions in The Nigerian Capital Market. 2(1).
21. Parapar, J., Moreira, J., & O’Reilly, M. (2023). A new species of Terebellides (Polychaeta: Trichobranchidae) from Scottish waters with an insight into branchial morphology. Marine Biodiversity, 46(1), 211–225. https://doi.org/10.1007/s12526-015-0353-5
22. Sanjay Bhanushali, J., Jhansi Rani Professor, M., & Jhansi Rani, M. (2023). The Impact of Behavioral Finance on the Decision-making Process and Investments. ISBR Management Journal, 8(01), 54–63. https://doi.org/10.52184/isbrmj.v8i01.000
23. Sattar, M. A., Toseef, M., & Sattar, M. F. (2020). Behavioral finance biases in investment decision making. International Journal of Accounting, Finance and Risk Management, 5(2), 69–76.
24. Thomas, J. K. (2022). Inventory Changes and Future Returns. 163–187.
25. Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 453-458. 211(4481), 453–458.
26. Valaskova, K., Bartosova, V., & Kubala, P. (2019). Behavioral Aspects of the Financial Decision-Making. Organizational, 52(1), 22–31. https://doi.org/10.2478/orga-2019-0003
27. Yi, S. (2024). Behavioral Finance: Several Key Effects of Investor Decision-Making. SHS Web of Conferences, 188, 01017. https://doi.org/10.1051/shsconf/202418801017