Impact of Behavioral Factors on Making Investment Decision: Study on Investors of Mongolian Stock Exchange

Abstract

The stock market is the main profile of an economy, and investment performance shows. The purpose of this study is to explore and identify the behavioral factors that influencing individual investors’ investment decision at Mongolian Stock Exchange. Especially, find out the effect of the main factors, such as heuristic, prospect theory, market theory and herding effect. In efficient and well-developed capital markets encourage economic growth through increased savings, approach to converting the excessive savings into investing.

The data of study are collected via the questionnaire on the basis of a 5 likert scale from investors of MSE. Next step of data collection R program used to analyze and interpret the data. To find out the reliability of the questionnaire, the Cronbach’s alpha was used in analysis , which was 0.865. EFA and hypothesis student T-test have been applied in the study.

Result of research study showed the all-behavioral factors have a significant impact on the decision-making process of investors in Mongolia, which the acceptance of all assumptions (Alternative hypothesis: The behavioral variables that impact the investment decisions of investors at the Mongolian Stock Exchange are divided in four main parts as the reviewed theories: Heuristics, Prospect theory, Market theory, and Herding effect.) in decision making process for individual investors.