Measuring the Effect of Confirmatory Bias on the Level of Investment at the Rwandan Stock Market
European Business & Management
Volume 4, Issue 3, May 2018, Pages: 67-74
Received: Apr. 1, 2018; Accepted: Apr. 26, 2018; Published: Jul. 12, 2018
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Authors
Jacob Niyoyita Mahina, Department of Business Studies, University of Tourism, Technology and Tourism, Kigali, Rwanda
Wilson Bashaija, School of Entrepreneurship, Jomo Kenyatta University of Agriculture Technology, Nairobi, Kenya
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Abstract
Behavioural finance is still a new arear which attempt to better understand and explain how emotional and cognitive errors influence investment on the stock markets. The main objective of this study was to establish the effect of confirmatory bias on investment in the Rwanda Stock Exchange. The study used cross-sectional descriptive survey research design to ascertain and establish the effect of behavioural biases on investment in the Rwanda stock exchange. The target population comprised of 13,543 individual, group investors at the Rwanda Stock Exchange. Random sampling was used where the targeted population was individual investors to finally yield a sample size of 374 respondents. A questionnaire was used to collect the primary data. A pilot test was undertaken by carrying out a small scale trial run of the research instrument. Data analysis involved the use of descriptive and inferential statistics. A Linear regression model was used to predict the probability of different possibility outcomes of dependent variables, helping to predict the probability of an investor to invest in RSE. The results confirmed that there was a significant positive linear relationship between confirmatory bias and Investment in Rwanda stock market. The study also concluded that most investors suffered from confirmatory bias in investment in stock markets. The study recommends that investors should be keen to identify such bias to increase their rationality in stock trading.
Keywords
Confirmatory Bias, Investment, Rwanda, Stock Exchange
To cite this article
Jacob Niyoyita Mahina, Wilson Bashaija, Measuring the Effect of Confirmatory Bias on the Level of Investment at the Rwandan Stock Market, European Business & Management. Vol. 4, No. 3, 2018, pp. 67-74. doi: 10.11648/j.ebm.20180403.11
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Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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