Alternatives to the efficient market hypothesis: an overview

Nyakurukwa, Kingstone; Seetharam, Yudhvir

doi:10.1108/jcms-04-2023-0014

Cited by 3 publications

(1 citation statement)

References 37 publications

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“…The premises of perfect rationality are understood as a descriptive approach that prescribes how decision-makers should behave, but not how they actually do (Sent, 2018). The recent systematic review by Nyakurukwa and Seetharam (2023) concluded that rationality is a dynamic concept that is the best understood with a multidisciplinary approach, combining concepts, theories, and ideas from a variety of disciplines, including physics, economics, anthropology, and sociology.…”

Section: The Types Of Investor Rationalitymentioning

confidence: 99%

Exploring rationality of peer-to-peer lending investors: A conceptual approach and multicriteria-based methodology

Legenzova,

Leckė

2024

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Research background: The shift towards globalization, technological innovations, and digitalization has led to the emergence of various innovative financial products, such as peer-to-peer (P2P) lending. Characterised by digital solutions and easier access, P2P lending allows investors to make quick and more frequent investment decisions. However, this can increase investors’ vulnerability to behavioural biases, and therefore leave them open to potential losses. There is a research gap in understanding P2P lending investors’ rationality, including research methods tailored to the specifics of this innovative product. Purpose of the article: Objectives of our study is to propose a conceptual approach and multicriteria-based methodology to measure the degree and type of investor rationality; to apply it in Lithuanian P2P lending context, and to explore the differences in rationality based on the investors’ sociodemographic characteristics. Methods: The data set represented answers to an online survey collected from 390 Lithuanian P2P lending investors. Three groups of criteria were employed to assess rationality degree and type: risk and return (reflecting utility maximization), use of available information, and behavioural biases criteria. The rationality index was developed to measure the rationality degree of individual P2P lending investors; descriptive and cluster analysis were performed to assess the rationality type; t-test, ANOVA test and regression analysis were used to investigate its influencing factors. Findings & value added: The results indicated a moderate overall degree of P2P lending investors’ rationality, with bounded rationality representing 96,67% of the sample. Further clustering analysis proved that bounded rationality behaviour is not homogenous; therefore, measures taken to increase individual’s rationality should be tailored to their specific rationality type primarily focusing on low-scoring rationality criterion. Regarding sociodemographic factors, investors’ financial literacy was identified as the only significant and positive determinant of P2P lending investors’ rationality, reinforcing the importance of financial literacy in society.

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Section: The Types Of Investor Rationalitymentioning

confidence: 99%

Exploring rationality of peer-to-peer lending investors: A conceptual approach and multicriteria-based methodology

Legenzova,

Leckė

2024

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Contrasting the Performance of Active and Passive Unit Trusts under Normal Market Conditions: Is the Experience of Emerging Markets Different?

Gopane,

Ravhura

2024

OMEE

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The predominant tradition in the literature is to scrutinise the competitive performance of passive and active investment strategies with less regard to the prevailing market climate. The thesis of this paper is that volatile market conditions may necessitate investment strategy adjustments. Such readjustments may confound empirical comparison of passive and active investing if econometric models do not adapt accordingly. Currently, the literature cannot give a stylised fact of whether the historical claims of passive–active relationships relate to normal market conditions or not, which is a flaw. The present study reduces the flagged knowledge gap by answering the question whether passive investment outperforms active investing under normal market conditions. The study applies the parametric and non-parametric risk-adjusted models of the Jensen alpha and Sharpe index. The empirical analysis is based on the weekly returns of 16 unit trusts listed on South Africa’s Johannesburg Stock Exchange for ten years (between 2009 and 2019). Consistent with the hypothesis of inefficient capital markets in developing economies, the study finds that active investing significantly outperforms passive investment strategy under normal market conditions. The results should benefit investors and policymakers in the era of increasing competitiveness, digitalisation, and globalisation.

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Akankah Sentimen Pasar Menghasilkan Keputusan Investasi yang Tepat?

Wiyasa,

Akob,

Sumail

2024

JSEB

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The aim of this research is to investigate the influence of market sentiment on investment decisions and the role of fundamentals and technicals as mediating variables. 259 respondents were selected using a purposive sampling technique, namely BRI Danareksa Sekuritas investors who had made transactions for at least the last 3 months. The results show that investors who have positive market sentiment can make the right investment decisions. Investors who have positive market sentiment and have the right technical analysis skills will also make the right investment decisions. However, even if you have good technical analysis but do not have complete information about the market, you will get weak or poor investment decisions. Furthermore, investors who have positive market sentiment will create the right fundamental analysis so that they will also make the right investment decisions.

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Alternatives to the efficient market hypothesis: an overview

Cited by 3 publications

References 37 publications

Exploring rationality of peer-to-peer lending investors: A conceptual approach and multicriteria-based methodology

Exploring rationality of peer-to-peer lending investors: A conceptual approach and multicriteria-based methodology

Contrasting the Performance of Active and Passive Unit Trusts under Normal Market Conditions: Is the Experience of Emerging Markets Different?

Akankah Sentimen Pasar Menghasilkan Keputusan Investasi yang Tepat?

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