Behavioural Biases, Socio-demographic Factors and Investment Outcomes: A Systematic Literature Review with Future Research Directions
DOI:
https://doi.org/10.68903/iilmr.v01i01.08Keywords:
Behavioural finance, financial decision-making, socio-demographic factors, Investment behaviourAbstract
Investment is highly important to build long-term wealth and ensure economic growth. Traditional financial theories always assumed investors to be rational decision-makers, but in reality individuals tend to make decisions which do not target only high returns, but show deviations from optimum outcomes. These are termed as suboptimal decisions which arise mainly due to behavioural biases affecting investors. Existing Behavioural Finance (BF) studies show that there are various reasons for these biases, including socio-demographic factors, which are also highly instrumental in affecting investors’ decision-making abilities. Though there are many empirical studies verifying these relationships, there is a lack of comprehensive systematic literature reviews (SLRs) that synthesise the findings on the relationship between socio-demographic factors and investment decisions. The present review attempts to address this gap by proposing a holistic framework to understand the relationship between behavioural biases, socio-demographic factors and investment outcomes. This study adopts a SLR protocol based on PRISMA 2020 guidelines, aiming to develop thematic pat-terns and determine future research directions. The methodology consists of qualitative content analysis of 70 selected articles to develop these relationships, rather than statistical data. The findings reveal that overconfidence bias and risk aversion are highly prominent in the existing literature, with their effects varying significantly due to investor demographics, especially gender and age.
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