Factors affecting investment decisions of individual investors in the Dhaka Stock Exchange

Abstract

This study investigates the key factors that influence individual investors' decision-making in stock exchange environments. While extensive research exists on institutional investment behavior, limited attention has been paid to the behavioral drivers behind individual investor choices, creating a critical research gap. Addressing this gap, the objective of this study is to examine the determinants guiding investment decisions among individual investors. A quantitative approach was adopted, utilizing a structured questionnaire comprising 27 items administered to 300 individual investors. Data were analyzed using statistical analysis softwares, with the Friedman rank test employed to evaluate the research hypotheses. The findings reveal that investors prioritize expected dividends, historical stock performance, access to market information, portfolio diversification, recommendations from brokers and family, corporate reputation, and ethical conduct. These factors collectively shape the investment behaviors of individuals. The study contributes to a more nuanced understanding of investor psychology and offers actionable implications for financial institutions and corporations aiming to tailor strategies and communication efforts that align with investor priorities.

Keywords: Behavioral finance; decision-making; investment behavior; stock market; investor psychology.