Behavioural Biases and Investment Decisions in Nigerian Stock Exchange

Abstract

The influence of behavioural biases on investing decision-making at the Nigerian Stock Exchange (NSE) is examined in this study. Overconfidence bias, anchoring bias, disposition bias, and herding bias are the four biases that are specifically addressed. The study employs a quantitative methodology and gathers information from 340 active NSE traders and investors. To investigate the relationships between these biases and investment decision-making, regression analysis is employed. The results show that all four biases have significant effects on investing decisions in the NSE. The degree to which overconfidence bias, anchoring bias, disposition bias, and herding bias affect investing behaviour varies. These results highlight the significance of comprehending and eliminating behavioural biases in the NSE to boost market efficiency and investment outcomes. In order to lessen the detrimental consequences of biases on investment decision-making, the study makes recommendations for investor education, regulatory interventions, market monitoring, longitudinal research, and boosting diversification and risk management measures. For the Nigerian financial market to be a rational and informed investing environment, it is essential to recognize and manage these biases.

Keywords: Behavioral biases, Investment Decision-Making, Nigerian Stock Exchange