Effect of Behavioural Biases on Investments at the Rwanda Stock Exchange
International Journal of Accounting, Finance and Risk Management
Volume 2, Issue 4, November 2017, Pages: 131-137
Received: May 27, 2017; Accepted: Jul. 5, 2017; Published: Aug. 9, 2017
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Jacob Niyoyita Mahina, Faculty of Business Studies, University of Tourism, Technology and Business Studies, Kigali, Rwanda
Willy Muturi, Facultyof School of Business, Department of Economics, Accounting and Finance, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya
Memba Florence, Facultyof School of Business, Department of Economics, Accounting and Finance, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya
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The main objective of this study was to establish the effect of behavioural biases on investment in the Rwanda Stock Exchange. The specific objectives were to establish the effects of self-serving bias, over-optimism bias, loss aversion, self- attribution bias and confirmatory bias on investment in the Rwanda stock exchange. The prospect theory, heuristics theory and herding theory formed the foundation of this study. The underlying epistemology of this research was positivist; focusing on examining earlier established theories under the assumption that reality is objectively given and can be described by measurable properties independent of the observer and the instruments. 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. 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 Rwanda Stok Exchange. The results confirmed that there was a significant positive linear relationship between self-serving bias, over-optimism bias, loss aversion bias, self-attribution bias, confirmatory bias and Investment in Rwanda stock market. The study also concluded that most investors suffered from behavioural biases in investment in stock markets. The study further recommends that the individual investors to seek the advice of stock brokers/fund managers to advise them accordingly in terms of performance of a specific security in which an investor would wish to invest in.
Self-Serving Bias, Over-Optimism Bias, Loss Aversion, Self-Attribution Bias, Confirmatory Bias, Investment, Rwanda Stock Exchange
To cite this article
Jacob Niyoyita Mahina, Willy Muturi, Memba Florence, Effect of Behavioural Biases on Investments at the Rwanda Stock Exchange, International Journal of Accounting, Finance and Risk Management. Vol. 2, No. 4, 2017, pp. 131-137. doi: 10.11648/j.ijafrm.20170204.11
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