Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications

Kazi Mostafa Arif; Md. Alamgir Hossain Bhuiya

doi:doi:10.11648/j.ijefm.20160406.15

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Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications

Kazi Mostafa Arif, Md. Alamgir Hossain Bhuiya

Published in International Journal of Economics, Finance and Management Sciences (Volume 4, Issue 6)

Received: 13 October 2016 Accepted: 25 October 2016 Published: 7 November 2016

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Abstract

The aim of the study is to examine the effect of behavioral biases on stock market investors’ decision making in Dhaka Stock Exchange. We focused on three well-documented biases i.e., disposition effect, herd behaviour and gambler’s fallacy. In this study we utilized primary data which were collected through our survey questionnaire. Based on these information, descriptive statistics were employed to construct different bias grades. We explored that women do not actively participate in security market as seen on interview time although women also invest in the security market, but most of the activities in the security market are carried out by men. It is also stimulating that seventy seven percent respondents are within the economic active age group, of 30-50 years which thus indicates a positive sign of the market. Moreover, the data reveals that the greater portion of our investors are bachelor graduate. In addition to that the most of the individual investors’ experience are within 3 to 10 years. After building bias grade of the above mentioned behavioral biases it can be settled that our participants are, on average, moderately affected by behavioral biases. And lastly, a hypothesis was inspected that the behavioral biases are more obvious for less experienced investors but our results support this hypothesis weakly. As we conceive that investors do not learn from experience and perform illogically in the stock market.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 4, Issue 6)
DOI	10.11648/j.ijefm.20160406.15
Page(s)	344-348
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Behavioral Biases, Disposition Effect, Herd Behaviour, Gambler’s Fallacy

References

[1]	Albert Phang, Behaviral Finance: Key Concepts- Gambler’s Fallacy. Retrieved from http://www.investopedia.com/university/behavioral_finance/behavioral7.asp
[2]	Bangladesh Economic Review, Finance Division, Ministry of Finance, Government of Bangladesh, Various Issues.
[3]	Bailey et al. (2011) “Behavioral Biases and Mutual Fund Clieteles”, Working paper, Cornell University.
[4]	Chiang, T. C. & Zheng, D. (2010) "An empirical analysis of herd behavior in global stock markets", Journal of Banking and Finance, vol. 34, no. 8, pp. 1911-1921.
[5]	Cochran, W. G. (1963) Sampling Techniques, 2nd Ed., New York: John Wiley and Sons, Inc.
[6]	Frazzini, Andrea (2006) “The disposition effect and under-reaction to news”, Journal of Finance 61: 4, 2017-46.
[7]	Henderson, T. (2012) “Does prospect theory explain the disposition effect?” Journal of Behavioral Finance.
[8]	Hossain, M. F., and Nasrin, S. (2012) ‘Factors Affecting Selection of Equity Shares: The Case of Retail Investors in Bangladesh’, European Journal of Business and Management, 4 (20), 110 - 124.
[9]	Hossain M. S. (2013) “Behavioral Biases of Stock Market in Bangladesh”, The Daily Financial Express, 21 June 2013, Dhaka, Bangladesh.
[10]	Islam, Sohani (2012) ‘Behavioral Finance in an Efficient Market’, Global Journal of Management and Business Research, 12 (14), Version 1.0.
[11]	Khaled K. I. (2011) Investigation Report of Probe Committee, Bangladesh.
[12]	Odean, Terrance (1998) “Are investors reluctant to realize their losses?” Journal of Finance 53: 5, 1775-98.
[13]	Rashid, M. and Nishat, M. A. (2009) ‘Satisfaction of Retail Investors on the Structural Efficiency of the Market: Evidence from A Developing Country’, Asian Academy of Management Journal, 14 (2), 41–64.
[14]	Shlomit and et. al (2012), “Stock Market Investors: Who Is More Rational, and Who Relies on Intuition?” International Journal of Economics and Finance, Vol. 4, No. 5; May 2012.
[15]	Tan, L. and et al (2008), "Herding behavior in Chinese stock markets: An examination of A and B shares", Pacific-Basin Finance Journal, vol. 16, no. 1, pp. 61-77.
[16]	Wahab, M. A., and Faruq, M. O., 2012, “A Comprehensive Study on Capital Market Developments in Bangladesh,” March 2012, Research Department, Bangladesh Bank, Head Office, Dhaka, Bangladesh.

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APA Style

Kazi Mostafa Arif, Md. Alamgir Hossain Bhuiya. (2016). Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications. International Journal of Economics, Finance and Management Sciences, 4(6), 344-348. https://doi.org/10.11648/j.ijefm.20160406.15

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ACS Style

Kazi Mostafa Arif; Md. Alamgir Hossain Bhuiya. Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications. Int. J. Econ. Finance Manag. Sci. 2016, 4(6), 344-348. doi: 10.11648/j.ijefm.20160406.15

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AMA Style

Kazi Mostafa Arif, Md. Alamgir Hossain Bhuiya. Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications. Int J Econ Finance Manag Sci. 2016;4(6):344-348. doi: 10.11648/j.ijefm.20160406.15

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@article{10.11648/j.ijefm.20160406.15,
  author = {Kazi Mostafa Arif and Md. Alamgir Hossain Bhuiya},
  title = {Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {4},
  number = {6},
  pages = {344-348},
  doi = {10.11648/j.ijefm.20160406.15},
  url = {https://doi.org/10.11648/j.ijefm.20160406.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20160406.15},
  abstract = {The aim of the study is to examine the effect of behavioral biases on stock market investors’ decision making in Dhaka Stock Exchange. We focused on three well-documented biases i.e., disposition effect, herd behaviour and gambler’s fallacy. In this study we utilized primary data which were collected through our survey questionnaire. Based on these information, descriptive statistics were employed to construct different bias grades. We explored that women do not actively participate in security market as seen on interview time although women also invest in the security market, but most of the activities in the security market are carried out by men. It is also stimulating that seventy seven percent respondents are within the economic active age group, of 30-50 years which thus indicates a positive sign of the market. Moreover, the data reveals that the greater portion of our investors are bachelor graduate. In addition to that the most of the individual investors’ experience are within 3 to 10 years. After building bias grade of the above mentioned behavioral biases it can be settled that our participants are, on average, moderately affected by behavioral biases. And lastly, a hypothesis was inspected that the behavioral biases are more obvious for less experienced investors but our results support this hypothesis weakly. As we conceive that investors do not learn from experience and perform illogically in the stock market.},
 year = {2016}
}

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TY - JOUR
T1 - Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications
AU - Kazi Mostafa Arif
AU - Md. Alamgir Hossain Bhuiya
Y1 - 2016/11/07
PY - 2016
N1 - https://doi.org/10.11648/j.ijefm.20160406.15
DO - 10.11648/j.ijefm.20160406.15
T2 - International Journal of Economics, Finance and Management Sciences
JF - International Journal of Economics, Finance and Management Sciences
JO - International Journal of Economics, Finance and Management Sciences
SP - 344
EP - 348
PB - Science Publishing Group
SN - 2326-9561
UR - https://doi.org/10.11648/j.ijefm.20160406.15
AB - The aim of the study is to examine the effect of behavioral biases on stock market investors’ decision making in Dhaka Stock Exchange. We focused on three well-documented biases i.e., disposition effect, herd behaviour and gambler’s fallacy. In this study we utilized primary data which were collected through our survey questionnaire. Based on these information, descriptive statistics were employed to construct different bias grades. We explored that women do not actively participate in security market as seen on interview time although women also invest in the security market, but most of the activities in the security market are carried out by men. It is also stimulating that seventy seven percent respondents are within the economic active age group, of 30-50 years which thus indicates a positive sign of the market. Moreover, the data reveals that the greater portion of our investors are bachelor graduate. In addition to that the most of the individual investors’ experience are within 3 to 10 years. After building bias grade of the above mentioned behavioral biases it can be settled that our participants are, on average, moderately affected by behavioral biases. And lastly, a hypothesis was inspected that the behavioral biases are more obvious for less experienced investors but our results support this hypothesis weakly. As we conceive that investors do not learn from experience and perform illogically in the stock market.
VL - 4
IS - 6
ER -

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Author Information

Kazi Mostafa Arif

Department of Economics, Islamic University, Kushtia, Bangladesh
Md. Alamgir Hossain Bhuiya

Department of Economics, Islamic University, Kushtia, Bangladesh

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APA Style

Kazi Mostafa Arif, Md. Alamgir Hossain Bhuiya. (2016). Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications. International Journal of Economics, Finance and Management Sciences, 4(6), 344-348. https://doi.org/10.11648/j.ijefm.20160406.15

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ACS Style

Kazi Mostafa Arif; Md. Alamgir Hossain Bhuiya. Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications. Int. J. Econ. Finance Manag. Sci. 2016, 4(6), 344-348. doi: 10.11648/j.ijefm.20160406.15

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AMA Style

Kazi Mostafa Arif, Md. Alamgir Hossain Bhuiya. Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications. Int J Econ Finance Manag Sci. 2016;4(6):344-348. doi: 10.11648/j.ijefm.20160406.15

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@article{10.11648/j.ijefm.20160406.15,
  author = {Kazi Mostafa Arif and Md. Alamgir Hossain Bhuiya},
  title = {Capital Market Investors’ Attitudes in Bangladesh: Evidence and Policy Implications},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {4},
  number = {6},
  pages = {344-348},
  doi = {10.11648/j.ijefm.20160406.15},
  url = {https://doi.org/10.11648/j.ijefm.20160406.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20160406.15},
  abstract = {The aim of the study is to examine the effect of behavioral biases on stock market investors’ decision making in Dhaka Stock Exchange. We focused on three well-documented biases i.e., disposition effect, herd behaviour and gambler’s fallacy. In this study we utilized primary data which were collected through our survey questionnaire. Based on these information, descriptive statistics were employed to construct different bias grades. We explored that women do not actively participate in security market as seen on interview time although women also invest in the security market, but most of the activities in the security market are carried out by men. It is also stimulating that seventy seven percent respondents are within the economic active age group, of 30-50 years which thus indicates a positive sign of the market. Moreover, the data reveals that the greater portion of our investors are bachelor graduate. In addition to that the most of the individual investors’ experience are within 3 to 10 years. After building bias grade of the above mentioned behavioral biases it can be settled that our participants are, on average, moderately affected by behavioral biases. And lastly, a hypothesis was inspected that the behavioral biases are more obvious for less experienced investors but our results support this hypothesis weakly. As we conceive that investors do not learn from experience and perform illogically in the stock market.},
 year = {2016}
}

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