Impact of Behavioural Biases on Investment Objective and Expected Rate of Return- A Study of Female Investors

Abstract

It is generally assumed that financial decisions are exclusively based on the rationality of objective calculations. This traditional view of finance is challenged by the theories and studies of behavioural finance. The perspective on behavioural finance strongly believes that human decisions are not truly rational and several psychological factors like heuristic and cognitive biases influence the investment decisions. In the present day time as the role of the women in the family has transformed drastically. Women are becoming financially independent and hence are also making investment decisions.  The present study aims to examine the impact of behavioural biases on the investment decisions of the female investors. The data has been collected from 345 working women. The study examines the impact of mental accounting, loss aversion, herd mentality and over confidence biases on female investors expected rate of return and duration of investment. The results have been analysed using multiple regression. The study concludes that some of the selected behavioural biases have a strong impact investment decision.