Behavioral factors influencing individual investors' decision making in Vietnam market

TLDR

The study investigates how behavioral factors such as mood, overconfidence, reaction biases, and herding mediate the relationship between investor demographics (gender, age, experience, education) and investment decisions in Vietnam. Data were collected via a structured questionnaire from 400 Vietnamese investors and analyzed with partial multiple regression to assess how demographics influence investment choices through behavioral traits. Results show that emotion, overconfidence, reaction biases, and herding strongly affect investment decisions, while age, gender, and education positively influence choices, and experience diminishes the impact of emotions.

Abstract

Using behavioral factors (mood, overconfidence, underreaction, overreaction, and herding behavior) as proxy variables in the Vietnamese stock market, this article tries to explore the link between investor demographics (gender, age, experience, and educational ability) and their investment decisions. This study compiles information from a structured questionnaire survey of 400 local, international, institutional, and individual investors in Vietnam. It employed partial multiple regression to examine how investors' demographic variables affected their investment choices using behavioral traits as mediator variables. According to the results, investor emotion, overconfidence, over/underreaction, and herd behavior all have a large impact on investing decisions. Additionally, investors' investing selections are significantly and favorably influenced by their age, gender, and degree of education. Although experience does not have a significant effect on financial decisions, investors start to ignore emotional aspects as they become more experienced.