Investigating the psychological factors that affect Egyptian investors’ behaviour and decisions before and after the pandemic

Abstract

Egyptian investors have lost a large portion of their investment due to the coronavirus pandemic. This research is novel research that aims to identify the behavioral factors of Egyptian investors that affect their investment decisions, before and after the pandemic. A number of survey questionnaires were distributed to Egyptian investors, in addition to personal interviews. Descriptive statistics and a regression model were used to analyzing the impact of psychological factors on the investment decisions for Egyptian investors. Results revealed that demographic and psychological factors influence investment decisions: overconfidence, loss, and regret aversion, disposition effect, representativeness and herding behavior, but it is not affected by gambler’s fallacy. It is affected also by some other demographic variables. However, income level has no effect. After the pandemic, not all demographic and psychological factors affect Egyptian investor’s behaviour. The behaviour finance theory is valid only and applied before the pandemic. This research opens the door for a new dimension to studying how to work on the governance of investors’ decisions, rationalizing those decisions and their effectiveness, which ultimately contributes to achieving high returns on their investment portfolios.

Behavioural Finance: A Bibliometric Analysis Using Scopus Database

“…Currently, no single behavioural finance theory can fully explain the variables impacting investors' investing choices (Joo & Durri, 2015). We derive that the behavioural finance theory was applicable prior to the crisis because the Egyptian stock market is an emerging market and is inefficient but useless afterward (Hafez, 2021). However, the evidence of links between prejudices and other socioeconomic characteristics need adjustment, notably regarding gender (anticipated) and cultural disparities among geographies.…”