Open Access Journal

ISSN : 2456-1304 (Online)

International Journal of Engineering Research in Electronics and Communication Engineering(IJERECE)

Monthly Journal for Electronics and Communication Engineering

Open Access Journal

International Journal of Science Engineering and Management (IJSEM)

Monthly Journal for Science Engineering and Management

ISSN : 2456-1304 (Online)

Loss Aversion bias and Investment Decision: A Study of Investors in Indian Equity Market

Author : Ms. Harsha Satramani 1

Date of Publication :26th October 2020

Abstract: According to conventional financial theory, investor are fully rational and make decision that reflects all available information. But still Efficient Market Hypothesis has failed to explain market behaviour. That’s when Behavioural Finance comes into picture. In current scenario, behavioural finance plays an important role in investment decision making. So the purpose of this study is to determine the various behavioural factors that influences investors in Indian Equity Market. Many researchers have found that number of biases do have impact on investment decision making. But, here, in this paper we have discussed about very common and predictable bias – Loss aversion, which refers to tendency of individuals to avoid losses strongly as compared to obtain gains. There are many studies undertaken about its existence and results are mixed in terms of its influence on investors in Indian equity market. With this, the present research tries to investigate presence of Loss aversion bias among investors of Rajkot who invest in Indian equity market. We will also examine whether variables like gender, income level, and investment experience have impact over loss aversion bias. To identify the influence of these variables in investor’s decision making, structured questionnaire based on 5-point Likert Scale was used among investors of Rajkot region. With relevant statistical tools, it was found that investors are influenced by loss aversion bias in their decisions, gender difference do affect the existence of this bias and same is in the case with experience of investors.

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