The effects of behavioral finance bias on business investment expansion decision during political crises
a case study of SME of Northwest region in Cameroon
DOI:
https://doi.org/10.59051/joaf.v17i1.884Keywords:
Behavioural Finance Biases, Investment Decision Making, SMEAbstract
Purpose: This research aimed at assessing the effects of behavioral finance bias on investment decisions in small and medium size enterprises in Mezam Division. Most at times investors make decisions based on their physiology and emotions and this has often led to poor investment decisions. However, previous research has focused on the effects of these biases on the financial market. This research closes the gap as the effort was motivated by the need to not only look at the effect of the biases but evaluate how it affects individual investors involved in physical investment.
Method: A case study of SMEs in Mezam Division was used in this examination through 150 closed and open-ended questionnaires that were self-administered during a period starting from the Some questionnaires were administered online to the respondents, depending on the agreed media with the respondent. As a method of analysis, we use descriptive statistical and a probit estimation techniques.
Findings: Results from data analysis reveals that overconfidence bias significantly increase the likelihood of SMEs to invest further by 94%, there is a negative and insignificant effect of anchoring bias on the decision to invest further and representative bias has a significant positive effect on the decision to investment by 69% on SMEs in Mezam Division. Overall, this study highlights the positive effects of behavioral bias on investment decisions in SMEs
Originality / relevance: This study contributes to the understanding of the of behavioral finance bias on investment decision in small and medium size enterprise in Cameroon during political crisis. This can help policy makers take appropriate measures to encourage entrepreneurship of youth that are victims of political instability.
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