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Human brain and financial behavior: a neurofinance perspective

Author

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  • Mrinalini Srivastava
  • Gagan Deep Sharma
  • Achal Kumar Srivastava

Abstract

Purpose - This study aims to review the relationship between neurological processes and financial behavior from an interdisciplinary perspective. Individual decision-making is influenced by cognitive and affective biases; hence, it becomes pertinent to understand the origin of these biases. Neurofinance is an emerging field of finance budding from neuroeconomics and explains the relationship between human brain activity and financial behavior, drawn from interdisciplinary fields, including neurology, psychology and finance. Design/methodology/approach - This conceptual paper extensively reviews the extant literature and performs meta-analysis to attain its research objectives. Findings - The paper highlights the use of neuroimaging techniques in mapping the brain areas to help understand the processes in the higher cognitive areas of brain. The paper raises some new questions regarding individual preferences and choices while making financial or non-financial decisions. Originality/value - The special focus on dysfunctions arising in brain because of injury and their impact on decision-making is also a key point in this paper and is summarized using meta-analytic forest plot. The existing literature provides instances where emotional processing is altered by injury in brain and may lead to more advantageous decisions, especially in risky situations.

Suggested Citation

  • Mrinalini Srivastava & Gagan Deep Sharma & Achal Kumar Srivastava, 2019. "Human brain and financial behavior: a neurofinance perspective," International Journal of Ethics and Systems, Emerald Group Publishing Limited, vol. 35(4), pages 485-503, June.
    • Handle: RePEc:eme:ijoesp:ijoes-02-2019-0036
    DOI: 10.1108/IJOES-02-2019-0036
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    Citations

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    Cited by:

    1. Ambika Zutshi & John Mendy & Gagan Deep Sharma & Asha Thomas & Tapan Sarker, 2021. "From Challenges to Creativity: Enhancing SMEs’ Resilience in the Context of COVID-19," Sustainability, MDPI, vol. 13(12), pages 1-16, June.
    2. Haruthai Kasemharuethaisuk & Taweesak Samanchuen, 2023. "Factors Influencing Behavior Intention in Digital Investment Services of Mutual Fund Distributors Adoption in Thailand," Sustainability, MDPI, vol. 15(3), pages 1-21, January.
    3. Mandeep Mahendru & Vibha Arora & Ravi Chatterjee & Gagan Deep Sharma & Irum Shahzadi, 2024. "From Over-Tourism to Under-Tourism via COVID-19: Lessons for Sustainable Tourism Management," Evaluation Review, , vol. 48(1), pages 177-210, February.
    4. Anum Khan & Muhammad Shujaat Mubarik, 2022. "Measuring the role of neurotransmitters in investment decision: A proposed constructs," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 258-274, January.

    More about this item

    Keywords

    Decision-making; Neuroeconomics;

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