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S.

Titlle

ye ar

Author

Concept

Major findings

Limitations

Future research

Internal Determinants for Diversificatio n in Banks in India an Empirical Analysis

20 09

Sangeeta Arora & Shubpreet Kaur

banking sector have been instrumen tal in making banks to diversify their operation s

risk reduction, cost of production, regulatory control and technologic al change have been instrumenta l in bringing out variations in the structure of income of the banks

The Diversificatio n Stategyof Europeon Banks: determinants and Effects on Efficiency and Profitability

20 00

Landi Andrea and Venturelli Valeria

Positively related to Efficiency. An Impressive growth of bank revenue from Security and insurance business has observed.

Product Diversificatio n in the European Banking Industry: Risk and Loan Pricing Implications

20 05

Lepetit, Nys, Rous, Tarazi

investigat e the relationsh ip between bank risk and product diversific ation in the changing structure of the European banking industry

Banks which have expanded into noninterest income activities present a higher level of risk than banks which principally supply traditional intermediat ion activities.

Non-interest Income and Financial Performance at U.S. Commercial Banks

20 04

DeYoung, P. Roland

links between bank nonintere st income, business strategies, market condition s, technolog ical change, and financial performa nce traits of Taiwanes e investors that deviate from the typical rationale governing financial decisions

the banks earning grow more volatile as banks tilt their product mixes towards fee based activities and away from traditional intermediat ion activities. Risk tolerance is the most important factor for Taiwanese investors when they design their asset portfolios. However, they prefer stocks to other assets. When market environme nt and risk tolerance are considered, mutual funds are chosen over and above stocks. develop a model for selecting investment options under each asset type, and to construct a portfolio based on the investors preference in assets

The behavior of Taiwanese investors in asset allocation

20 11

Behavior of Indian Investor: A Market Research

20 11

Akash Jau hari

Classical theories do not fully explain or account for the Actual trades and movemen ts of the stock indices

Investment Behavior and the Negative Side of Emotion

20 05

Baba Shiv, George Loewenst ein

In contrast to the historicall y dominant view of emotions as a negative influence in human behavior (Peters & Slovic, 2000), recent research in neuroscie nce and psycholog y has highlighte d the positive roles played by emotions in decision making

When normal participants and control patients either won or lost money on an investment round, they adopted a conservativ e strategy and became more reluctant to invest on the subsequent round; these results suggest that they were more affected than target patients by the outcomes of decisions made in the previous Rounds.

decisions under uncertainty and decisions under ambiguity draw upon different neural processes, so that emotion is disruptive in one case but not the other.

research needs to determine the circumstances in which emotions can be useful or disruptive, and then the reasoned coupling of circumstances and emotions can be a guide to human behavior.

Differential Investment Behavior between Grandparents and Grandchildren : The Role of Paternity Uncertainty

20 09

David I. Bishop

grandpare ntal solicitude and preferenti al investmen t

grandparen tal solicitude varied predictably as a function of parental certainty.

The actual investment behaviors received from or directed to grandparents will likely show great cross-cultural variability

Factors influencing individuals investor behavior: an empirical study of UAE financial markets

20 05

Hussain A. Hassan

Identifyin g investor behavior

The six important factors were: corporate earnings,ge t rich quick, stock marketabili ty, past performanc e of the firms stock, governmen t holdings and the creation of organized financial markets.

Invest behaviors differe with cultures. So the results are not applicable world wide

future studies should employ this design to document the differential investment effect with multiple siblings from the same family. Presumably, the age of the grandchild as well as their genetic certainty will affect grandparental investment. Study different cross cultural investment behaviors

1 0

BOYS WILL BE BOYS: GENDER, OVERCONFI DENCE, AND COMMON STOCK INVESTMEN T

BRAD M. BARBER AND TERRAN CE ODEAN

in areas such as .nance, men are more overcon.d ent than Women. Thus, theory predicts that men will trade more excessivel y than women. investors have momentu m trading mode and reversal trading mode, this study is introducin g a twoperiod OLG model into the futures market and construct the investor behavior model based on the futures market

men trade 45 percent more than women. Trading reduces mens net returns by 2.65 percentage points a year as opposed to 1.72 percentage points for women. The twoperiod OLG model based on the future market is consistent with the practical situation; second, the sufficient information investors such as institutiona l adopt reversal trading patterns generally; last, the insufficient information investors such as individual investors Investor trading behavior is always an important issue in the behavioral finance and market supervision, but the related research is scarce. Deep research on trading modes of heterogeneous investors in Chinese futures market plays a guidance role to some extent in investment decision-making and related market supervision.

1 1

The investor 20 behavior and 11 futures market volatility A theory and empirical study based on the OLG model and highfrequency data

Yun Wang, Renhai Hua, Zongchen g Zhang

adopt momentum trading patterns in general

1 2

Momentum 20 and behavioral 11 finance

Ding Du

reexamine the sources of momentu m profits by focusing on momentu m in monthly returns.

Different from previous studies, it is found that momentum may have multiple sources, and that risk or behavioral biases in isolation may not be sufficient to explain momentum .

researchers should focus on mis-reaction to common (marketwide) information to explain momentum as emphasized by Lo and MacKinlay.

1 3

Investor Attitudes and Behavior towards Inherent Risk and Potential Returns in Financial Products

20 10

ShyanRong Chou, GowLiang Huang, Hui-Lin Hsu

Studing attitudes and behavior towards investmen t risk to determine their past investmen t experienc e as an anchor, and to record their responses when exposed to economic signals

no difference by gender to investor propensity to take risk, nor in cognitive perception of such. However, higher and lower perceptions of risk were indicated by investors according to their personal investment experience. Investors with little experience in stocks and structured notes were found to have significantl y heightened perception of risk. T

Based on the evidence of these findings, to determine investors risk propensity through the use of variables based on levels experience is not reliable

To find others of concealed factors on risk propensity is a subject for future study. The

1 4

Do Individual 20 Day Traders 04 Make Money? Evidence from Taiwan

Brad M. Barber, Yi-Tsung Lee ,

analyze the profits earned on all subseque nt trades made by investors identified as day traders.

Though the investigations contained some analyses of the profitability of day trading, these analyses were largely limited to a handful of accounts. For example, the North American Securities Administrators Association sponsored a widely cited study of the profitability of 26 day traders at All-Tech brokerage, a brokerage that catered to day traders and was a target of the Senate investigations. Drawing conclusive inferences from such a small sample of accounts from a brokerage firm under investigation is difficult.

1 5

Risk and decision makin by finance executives: a survey study

20 07

Les Coleman

addresses biases that are related to risk propensit y, and categorise s them under five headings: decision makers characteri stics and perceptio n; reference levels; mental accountin g and the assumptio n of mean reversion; the longshot bias or overconfi dence; and the desire for immediat e gratificati on.

Just over half the executives proved willing to take a risk, and almost half the variance in their risk propensity was explained roughly equally by respondent s: endowment , perception of risks role in decisions, assessment of alternative choices, and expectation of the decisions outcome. Manipulati on of the cases along four dimensions varied the decisions facts, but they proved only marginally significant to risk taking.

Unfortunately the sample size is too small to permit structural equation modelling

The first is the need to examine decisions (and, by implication, other finance practices) in a real-world context where subjects follow their natural decision styles, rather than conforming to norms imposed by experimental settings.

1 6

Investors behaviour in the Athens Stock Exchange (ASE)

20 07

Dimitrios I. Maditinos , Z eljko S evic

investigat e the various methods and technique s used by Greek investors (both professio nal and individual s) when evaluatin g potential additions to their investmen t portfolios .

1 7

THE ROLE OF FEELINGS IN INVESTOR DECISIONMAKING

20 05

Brian M. Lucey, Michael Dowling

surveys the research on the influence of investor feelings on equity pricing. whether variations in feelings that are widely experienc ed by people

The results indicate that ININ rely more on newspapers /media and noise in the market when making their investment decisions, while professiona l investors rely more on fundamenta l and technical analysis and less on portfolio analysis While this is an efficient decisionmaking tool and is consistent with our knowledge of how people generally make decisions, it can result in errors if the investor allows irrelevant mood

limited knowledge regarding investment decisionmaking processes and consumer behaviour as it applies to nancial assets and services, the possibilities for further research in this area, particularly in developing markets, are extensive.

conducting a similar study in different international markets, both those with the same characteristics as Greece and those with markedly different ones, to compare the results and establish generalisability.

many of the findings in the area are inconsistent with existing theories of how investors should make investment decisions.

Deepen the breath of investigations into the relationship between mood proxy variables and asset pricing. There has not yet been sufficient study in this area to allow anything other than very preliminary conclusions to be made about the relationship between mood and asset pricing. There is a

influence investor decisionmaking and, conseque ntly, lead to predictabl e patterns in equity pricing

states to influence their judgements . Section 5 described another manner in which investors allow their feelings to influence their investment decisions trust acts as the antecedent of the risk variable in existing investor decisionmaking models. Stock ownership involves both financial and ethical risk, which by definition requires some level of implicit trust in manageme nt and the market. the present paper makes a general statement concerning the interplay of a variety of influ? ences and personality characteristics, but can treat none in great detail. For example, while the role of risk in stock trading has been discussed at length in the finance and economics literature, it has not yet been subjected to rigorous investigation by management behaviorists.

need for investigations into asset classes other than equity returns, such as bonds, commodities and derivatives.

1 8

TRUST, 20 RISK, AND 01 SHAREHOL DER DECISION MAKING: AN INVESTOR PERSPECTIV E ON CORPORATE GOVERNAN CE Lori

Lori Verstegen Ryan and Ann K. Buchholtz

explain the previousl y unexplore d role of trust in the investor decisionmaking process.

the model itself requires empirical testing on the target group of indi? vidual investors; strangely, such psychological studies of investors are rare. The model could also be tailored to the related but unique characteristics of institutional investors, along with subsequent empirical testing.

1 1

Overcondenc 20 e and Trading 03 Volume

Markus Glaser and Martin Weber

overcon dent investors will trade more than rational investors.

2 0

20 Information, 11 Overconfidenc e and Trading: Do the Sources of Information Matter?

Margarida Abreu & Victor Mendes

investors who think that they are above average in terms of investment skills or past performanc e trade more. Measures of miscalibrati on are, contrary to theory, unrelated to measures of trading volume. the more strength frequently of the individual positive investors associatio invest in n between information frequency , the more of trading they trade and in financial informati products. on Our results acquisitio also n is confirm dependent previous on findings investors that selfconfi overconfid dence and ent investors, on the sources of who show informati a better than on used average by

It is not known whether overcondence is a robust phenomenon across several tasks that are often assumed to be related

There are several suggestions for future research. We measure various facets of overcondence: miscalibration, the better than average eect, illusion of control, and unrealistic optimism. Numerous studies suggest or argue, at least implicitly, that these manifestations of overcondence are related

investors

bias, trade more frequently

2 1

rading 20 Performance, 07 Disposition Effect, Overcondenc e, Representative ness Bias, nd Experience of Emerging Market Investors

GONGM ENG CHEN1 , KENNET H A. KIM2*, JOHN R. NOFSIN GER3 and OLIVER M. RU

study investmen t decision making in an emerging market.

Chinese investors suffer from three behavioral biases: (i) they tend to sell stocks that have appreciated in price, but not those that have depreciated in price, consistent with a disposition effect, acknowled ging gains but not losses. they seem overconde nt; and (iii) they appear to believe

the existing literature on debiasing has not conclusively shown that experience leads to learned rational behavior

The research can be done on other cross_ cultural environments.

that past returns are indicative of future returns

2 2

The Investment Behavior, Decision Factors and Their Effects Toward Investment Performance in the Taiwan Stock Market

Yu-Je Lee, GaoLiang Wang, Kae-Shu ChingYaw Chen, an Kao, FongPing Zhu

investors How would investmen prefer to t behavior make and investment decision among the factors companies affect with high performa credibility, nces of larger in the size, high Taiwan cash/stock stock dividends market. and high stock price (3H stocks) or high risk with high return. strategy selection is less of a considerati on for the investors.

2 3

A study on 20 small 11 investors behavior in choosing stock case study: Kuala-Lumpur stock market

Mohamm ad Reza Tavakoli Baghdada bad1*, Farid Habibi Tanha2 and Noreha Halid

to identify the key determina nts of choosing stock by small investors.

The research evidence reveals 13 effective factors in choosing stock which can influence small investors decisions for stock selection. These factors are in order of importance involving financial statements of companies, accounting instruments , past stock price (return), firms public information , profitabilit y variables, consult with anybody, financial ratios, past trading volume of stocks, secondhand information

small sample sizes, with further research in terms of indepth qualitative/and or quantitative studies required with larger sample sizes to deal with any issues in terms of making inferences or generalizations regarding the population as a whole.

additional qualitative small investor research across a larger sample will facilitate the confirmation/disc onfirmation of the importance of the proposed influencing variables on stock selection to identify a behavior pattern for this group of inventors;

resources, discounted cash-flow tools, governmen t policies, calculation of risk and economic variable.

2 4

Economic Factors And Individual Investor Behavior: The Case Of The Greek Stock Exchange

20 04

Anna A. Merikas Andre George S. Vozikis, as G. Merikas, Dev Prasad

survey of the factors, which mostly influence individual investor behavior in the Greek stock exchange.

there seems to be a certain degree of correlation between the factors that behavioral finance theory and previous empirical evidence identify as the influencing factors for the average equity investor, and the individual behavior of active investors in the Athens Stock

Lack of literature review

Future research should attempt to validate the two questions that this paper addressed: First, what relative importance do decision variables and especially economic decision variables have for individual investors making stock purchase decisions? Secondly, are there homogeneous clusters or groups of variables that form identifiable decision determinants that investors rely upon when making stock investment decisions?

Exchange

2 5

Predicting Individual Investors Intention to Invest: An Experimental Analysis of Attitude as a Mediator

20 11

Azwadi Ali

how companie s can appreciate from having strong brand equity in their efforts to encourage individual investors to invest in their stocks.

perceived risk, perceived returns and trust directly affect individual investors trading decisions while attitude towards brand partially mediates the relationship s. This finding suggests that, in courting individual investors, companies still need to perform

The research setting for the study was an educational institution and respondents were limited to undergraduates enrolled in the Investment and Portfolio Management unit at a university in Victoria, Australia. these antecedents explain only a portion of the variances in the attitudinal construct and in the outcome variable. There may be other factors which, although not part

Some examples include investors risk preference, present economic condition and the different levels of their financial literacy. Therefore, future research may include these suggested variables in order to increase the robustness of the findings.

2 6

LEND ME 20 YOUR 04 WALLETS: THE EFFECT OF CHARISMAT IC LEADERSHI P ON EXTERNAL SUPPORT FOR AN ORGANIZAT ION

financially while building a good image can result in their stocks being accepted quicker than the stocks of good performing companies with hidden images. FRANCIS charismat Results J. ic showed FLYNN1 leadershi that * and p can appeals BARRY influence from a M. external charismatic STAW2 support leader led for the to organizati increased on, investment particular in the firm, ly in and the making leaders the influence company was more greater attractive when the to outside prospects investors for an organizatio nal turnaround were more difficult.

of this study, may have significant influence on respective attitudes and investors behaviors

Although the archival study offers external validity, one can still question its internal validity; that is, whether charisma may have been attributed to corporate leaders after they were successful in raising stock prices. And, whereas the experiment augmented the internal validity of findings from the first study, the subjects involved had little real

To address these limitations, future empirical research might consider a time-series analysis of charismatic leadership attributions in the popular press and changes in stock price, so as to examine whether charisma alters real investment behavior.

experience in making investment decisions.

2 7

Interactions of 20 Individuals 08 CompanyRelated Attitudes and Their Buying of Companies Stocks and Products

Jaakko Aspara and Henrikki Tikkanen

how an individual s companyrelated attitudes, his/her tendency to buy/hold the company s stocks, and his/her tendency to buy/use the company s products are likely to interact.

the leverage effect is ultimately on the stock price on the aggregate level. First, individuals tendency to buy the products of the company will increase the sales and earnings of the company, resulting in increasing stock price, as the stock price is,

it does not explicitly address different kinds of companies with different kinds of product types. We do not pay explicit attention to differences in how individuals come to have positive attitude to different kinds of products and to companies producing different types of products (to different types of customers). For instance, differences between a

Further research should study the interplays between a companys product offerings, the creation of the rational expectations which individuals have in their roles as product buyers/users and stock buyers/ holders, the development of their attitudes to the products and the company, and the individuals buying behaviors as driven by the expectations and attitudes together.

based on traditional finance theory, fundamenta lly determined by the earnings. Second, individuals increased optimism and confidence in forming expectation s about the earnings and stock price increases of the company will lever the stock price further up. Finally, there will be a direct demand component for the stock based not only on the expectation s about the future earnings and financial

company that offers products exclusively to consumers (B2C) and a company that offers products exclusively to serve the output of other companies/orga nizations (B2B) are likely to be considerable.

2 8

Behavioural Finance

20 07

Martin Sewell

returns from the stock but also on individuals positive attitude to the company and, potentially, the correspondi ng experiential utility gained from ownership per se in the present which will lever up the market stock price as well. An Behavioura introducti l on to _nance is behaviour of interest al _nance, because it including helps a review explain of the why and major how works markets and a might be summary inefficient. of important heuristics.

2 9

Neighbors Matter: Causal Community Effects and Stock Market Participation

20 08

J. R. Brown, Z. Ivkovic, P. A. Smith, and S. Weisbenn er

3 0

A Risk Perception Primer: A Narrative Research Review of the Risk Perception Literature in Behavioral Accounting and Behavioral Finance

20 04

Victor Ricciardi

provides evidence of a causal relation between the average stock market participati on decisions of ones communit y and an individual s decision of whether to own stocks overview of the concepts of risk, perceptio n, and risk perceptio n with the financial scholar in mind. There is also a presentati on on the behaviora l finance concepts and themes that might

an initial increase in the average stock ownership level in a community may have a multiplier effect, making it more likely that other individuals will also begin participatin g.

the role of affect or feelings, the influence of worry, the notion of perceived control, the significanc e of expert knowledge, the issues of overconfide nce, and the concern or potential losses in dollar terms. The 5 judgment

Finance scholars should recognize that a project involving behavioral finance (including the topic of risk perception) and based on an interdisciplinar y research presents some unique challenges

Present the material in a manner that a wider audience of finance academics and professionals understand and can replicate it.

influence an individual .s perceptio n of risk for different types of financial services and investmen t products

3 2

A study on small investors behavior in choosing stock case study: Kuala-Lumpur stock market

Mohamm ad Reza Tavakoli Baghdada bad1*, Farid Habibi Tanha2 and Noreha Halid

to identify the key determina nts of choosing stock by small investors.

attributes are: the role of familiarity, the overall perceived riskiness of a stock, the overall perceived return of a stock, the significanc e of the investment time horizon (short term vs. long run), and the likelihood of investing in the stock. The research evidence reveals 13 effective factors in choosing stock which can influence small investors decisions for stock selection. These factors are in order of importance involving financial

small sample sizes, with further research in terms of indepth qualitative/and or quantitative studies required with larger sample sizes to deal with any issues in terms of making inferences or generalizations regarding the population as a whole.

additional qualitative small investor research across a larger sample will facilitate the confirmation/disc onfirmation of the importance of the proposed influencing variables on stock selection to identify a behavior pattern for this group of inventors;

statements of companies, accounting instruments , past stock price (return), firms public information , profitabilit y variables, consult with anybody, financial ratios, past trading volume of stocks, secondhand information resources, discounted cash-flow tools, governmen t policies, calculation of risk and economic variable.

3 3

Momentum 20 and behavioral 11 finance

Ding Du

reexamine the sources of momentu m profits by focusing on momentu m in monthly returns.

3 4

Factors influencing individuals investor behavior: an empirical study of UAE financial markets

20 05

Hussain A. Hassan

Identifyin g investor behavior

Different from previous studies, it is found that momentum may have multiple sources, and that risk or behavioral biases in isolation may not be sufficient to explain momentum . The six important factors were: corporate earnings,ge t rich quick, stock marketabili ty, past performanc e of the firms stock, governmen t holdings and the creation of organized financial markets.

researchers should focus on mis-reaction to common (marketwide) information to explain momentum as emphasized by Lo and MacKinlay.

Invest behaviors differe with cultures. So the results are not applicable world wide

Study different cross cultural investment behaviors

3 5

THE ROLE OF FEELINGS IN INVESTOR DECISIONMAKING

20 05

Brian M. Lucey, Michael Dowling

surveys the research on the influence of investor feelings on equity pricing. whether variations in feelings that are widely experienc ed by people influence investor decisionmaking and, conseque ntly, lead to predictabl

While this is an efficient decisionmaking tool and is consistent with our knowledge of how people generally make decisions, it can result in errors if the investor allows irrelevant mood states to influence their judgements . Section 5 described another manner in which

many of the findings in the area are inconsistent with existing theories of how investors should make investment decisions.

Deepen the breath of investigations into the relationship between mood proxy variables and asset pricing. There has not yet been sufficient study in this area to allow anything other than very preliminary conclusions to be made about the relationship between mood and asset pricing. There is a need for investigations into asset classes other than equity returns, such as bonds, commodities and derivatives.

e patterns in equity pricing

investors allow their feelings to influence their investment decisions

3 6

Economic Factors And Individual Investor Behavior: The Case Of The Greek Stock Exchange

20 04

Anna A. Merikas Andre George S. Vozikis, as G. Merikas, Dev Prasad

survey of the factors, which mostly influence individual investor behavior in the Greek stock exchange.

there seems to be a certain degree of correlation between the factors that behavioral finance theory and previous empirical evidence identify as the influencing factors for the average equity investor, and the individual behavior of active investors in the Athens Stock

Lack of literature review

Future research should attempt to validate the two questions that this paper addressed: First, what relative importance do decision variables and especially economic decision variables have for individual investors making stock purchase decisions? Secondly, are there homogeneous clusters or groups of variables that form identifiable decision determinants that investors rely upon when making stock investment decisions?

Exchange

Efficient Market Hypothesi s And Behaviora l Finance Is A Compromi se In Sight?

Nikolai Chuvakhin

Studying the Efficient Market Hypothesi s And Behaviora l Finance relation

People are rational in standard finance; they are normal in behavioral finance

Efficient market hypothesi s and forecastin g

20 04

Allan Timmer mann*, Clive W.J. Granger

Studying Efficient market hypothesi s and forecastin g relation

If the behavior of investors produces efficient markets by their continuous profit seeking, the reverse is that the EMH does not rule out predicting many other variables that, although of general interest, are not the basis for a profit making strategy.

there are likely to be short-lived gains to the first users of new financial prediction methods. Once these methods become more widely used, their information may get incorporated into prices and they will cease to be successful.

Risk

Familia rity

Return Attitude towards stock Organi zation s public image Firm related factors Intentio n to invest