In the context of the sophistication of financial relationships, investment alternatives, risk and recurrent recent financial crises, human factor has become increasingly important in investor decision-making. Studies on investment behavior of a number of authors at different times and places, encouraged this new widely accepted inter-disciplinary field of finance: Behavioral Finance. In order to understand and explain individual decision making and investment behavior, it is necessary to study behavioral factors which impact it. Various scholars have studied factors of financial behavior and their impact on financial decision making, and in particular a special focus has been given to psychological biases. Usually investors are not aware of their behavioral biases. If investors become conscious of biases they can face, they can act more rationally. This way of thinking might increase the quality of their decision-making. The paper aims to help decision-makers and investors get to know with psychological biases, in order to make better decisions when investing, reducing the chances of being vulnerable to behavioral deviations, as the consequences of individual errors are inevitably reflected at a macro level, causing instability and economic -financial crisis.

The study aims to measure the impact of psychological biases on financial decisions of the albanian individual investor. The paper uses primary data provided through structured interviews with 180 individual investors and one semi-structured interview with an expert of the financial market in Albania. Exploratory financial analysis, cronbach alpha test and descriptive analysis are used through R-software. The analysis and its results conclude a significant presence of psychological biases on the albanian individual investor behaviour. As there is too little research done on this field in Albania, the study informs of the presence of these biases and tries to explain their impact not only on the previous crisis the country has experienced, but also on the current situation of the financial market in the country.

Traditionally, classical finance theories have argued that investors are rational and not influenced by human factors when making financial decisions. Recent developments in the field of finance, such as the anomalies that occurred and occasional financial crises took place, raised skepticism among researchers changing their approach towards traditional theories, as these theories failed to explain or predict unexpected developments in the markets, thus not supporting the unrealistic assumption of rational man (homo economicus). The research work for this new field of finance belongs to the recent decades. More specifically, there are quite a few studies in Albania due to the presence of an underdeveloped financial market. In the multitude of different factors, which influence the financial behavior of the investor, most of the research in the field of financial behavior is dedicated to the study of psychological biases. The topic of this study focuses on the impact of the personality type of individual investors on their decisions to invest in financial assets offered in Albania. The study is composed in the same logic line as that of the purpose and the research question raised. Quantitative strategy is used to answer the research question and draw conclusions. Descriptive and regression analysis was used through R-programme to identify the significance of the type of personality in Albanian individual investor behavior. We use the questionnaire as an instrument to collect data. Big Five Personality Model is chosen as the measurement scale. Only coherent data that remained after the reliability test (Cronbach Alpha), will be further used in regression statistical analysis to examine their impact on investor behavior. The analysis shows that the type of personality affects individual investment decisions in financial assets. More specifically Extraversion, Conscientiousness, and Neuroticism affect the amount of money invested in the asset. 'Openness' and 'Neuroticism' affect the level of certainty investors perceive for the investment made in financial assets.