Impact of Psychological Variables on Investment Decision

Empirical Evidence from Bangladeshi Investors

Abstract

Investors’(in fact, human) psychology is mysterious to comprehend. The ultimate aspiration
of this study was to find out how psychological variables manipulate investors’ rational
investment decisions into irrational decisions. Traditional finance by and large ignores
psychological aspects of investors’investment decisions though it has an enormous impact on
investment decisions. In this study researcher tried to demonstrate how investors’
psychological variables play imperative role on investment decision. To conduct this research,
200 investors (From DSE and CSE) were considered as sample to collect primary data through
a structured questionnaire consisting 30 questions on dependent and independent variables to
analysis and interpret their psychological aspects on investment decision. Mainly, regression
analysis was adopted to analyze and interpret data using statistical tool like ‘Statistical
Package for the Social Sciences’ (SPSS). From the results of the analysis, researcher found
that psychological variables play immense role to be irrational behavior on investment
decision of the investors in Bangladesh. This paper also suggested some courses of action to
the investors, policymakers and researchers to consider in the future