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Determinants of Investment Decisions: A Study of Individual Investors on the Zimbabwe Stock Exchange

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  • Peter Hunguru
  • Vusumuzi Sibanda
  • Ruramayi Tadu

Abstract

This study investigated factors that inform individual investors in their decision-making on the Zimbabwe Stock Exchange. The main objective was to identify and assess the effect of the behavioural factors on investment decisions of individual investors. A quantitative survey of 291 randomly selected individual Zimbabwe Stock Exchange investors was conducted. Multiple regression analysis was used to calculate the correlation coefficient of behavioural factors and investment decision while correlation analysis was used to measure the strength of the relationship between the independent variables. The findings of the study established that the predictor variables had a strong positive association between them and individual investor decision at a significant level of 0.01 and 0.005. The findings of the study revealed that individual investor decisions are influenced by the behavioural factors which are; anchoring, availability, gambler’s fallacy, overconfidence, herding, loss aversion, mental accounting, regret aversion and representativeness. The study recommends the need for improved information on the stock markets dynamics as well as training on investor awareness programmes to support the decision-making abilities of the individual investors on the ZSE to fully play its rightful role in the development of the economy.

Suggested Citation

  • Peter Hunguru & Vusumuzi Sibanda & Ruramayi Tadu, 2020. "Determinants of Investment Decisions: A Study of Individual Investors on the Zimbabwe Stock Exchange," Applied Economics and Finance, Redfame publishing, vol. 7(5), pages 38-53, September.
    • Handle: RePEc:rfa:aefjnl:v:7:y:2020:i:5:p:38-53
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    References listed on IDEAS

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    Cited by:

    1. Muhammad Asim Shahzad & Du Jianguo & Naveed Jan & Yasir Rasool, 2024. "Perceived Behavioral Factors and Individual Investor Stock Market Investment Decision: Multigroup Analysis and Major Stock Markets Perspectives," SAGE Open, , vol. 14(2), pages 21582440241, June.

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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