Behavioural Factors and Investment Decisions of Bankers in Ghana

Abstract

Behavioural finance attempts to investigate the psychological and sociological issues that influence investment decision making process of individuals and institutions. The study investigated the effects of behavioural factors on investment decisions making by bankers in Ghana. The study therefore sought to establish whether heuristics (overconfidence behaviour, herd behaviour, and anchoring behaviour) affect investment decisions of bankers in Ghana. Descriptive design study was used for the research. Questionnaire was used for data collection with 100% response rate being registered. Convenience sampling was used to select 150 bankers. Analysis was done using Microsoft Excel and Statistical Packages for Social Scientists. The study revealed that bankers’ investment decisions are affected by anchoring, overconfidence, and herd behaviours. Bankers tend to be overconfident while making investment decisions. Their decisions are also affected by experience of their past performance suggesting the effect of anchoring. Herd behaviour is not common among the bankers as most of them prefer making their own decisions. The study recommends further research should be done on the remaining heuristic factors i.e. representativeness, aversion to ambiguity, and innumeracy to establish their effects on investment decision making by bankers.