Abstract
The core objective of this research paper is to investigate which behavioral finance biases and demographic factors are associated
with a certain level of the financial risk tolerance with moderating effect of investor personality traits. Moreover, the study pointed
out how these kinds of behavioral biases and demographic factors can influence investment decisions of the individual investor.
Subsequently behavioral finance has become more important within investment avenues, furthermore this research within the
Pakistan perspective is considered as compulsory. In this study we have took nine behavioral finance biases namely familiarity
bias, overconfidence bias , representativeness bias , herding bias , anchoring bias , confirmation bias , loss aversion bias ,
disposition bias , availability bias and five demographic factors such as age, gender, marital status ,educational qualification ,&
size of investment as control variables also , furthermore five important dimensions of the personality traits namely extraversion
,agreeableness ,conscientiousness ,neuroticism ,and openness as moderating variables .The questionnaire is adopted from the
different sources for the collection of the data from 400 individual investors from the Pakistan Stock Exchange . The Results of
the study point out that individual investors at Pakistan Stock Market ” the total forty five moderating combination were
established with interactions of nine behavioral finance biases .Out of forty five moderating combinations of personality traits
with independent variables of behavioral finance biases, forty two moderating effects significantly change the impact of behavior
finance biases on dependent variable of financial risk tolerance. Whereas on the other hand out of nine behavioral finance biases
seven behavioral finance biases have significant direct effect on dependent variable of financial risk tolerance. It also is realized
that the role of all controlling demographic variables to effect dependent variable of financial risk tolerance is insignificant. This
study will be helpful for retail investors, regulators, policy makers, investment companies to sketch their investors and to offer
more refined investment opportunities.
Shahzad Hamid, Irfan Ul Llaha Arfeen. (2020) The Impact of Behavioural Finance Biases & Demographic Factors on Financial Risk Tolerance of the Individual Investors with Moderating Role of Personality Traits at Pakistan Stock Exchange, Paradigms , Vol 14, Issue 1.
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