Factors Affecting an Individual Investor Behavior: An Empirical Study in Twin Cities (Rawalpindi and Islamabad) of Pakistan

Rabeea Rizvi, Afsheen Abrar

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This research study intends to examine the impact of financial literacy, accounting information, firm size , classical wealth maximization and demographic factors on individual investor’s decision making through the empirical research specifically conducted from the twin cities of Pakistan, Rawalpindi and Islamabad. This article explores the relationship between decision making by individual investors, within the context of portfolio management and the factors that may influence such decisions in Pakistan. It argues that personal, demographic, economic, and religious and gender issues influence the individual’s perception leading him to a non-optimal decision. The data for this research is collected through a specifically designed questionnaire, consisting of thirty two (32) statements measuring a host of independent variables from each of the above mentioned factors, and seven (7) questions describing the respondents profile and one (1) question measuring the dependent variable: style/behavior of investment. The Overall result closes that the individual investors consider short and mid time investments, and less risky investments for better dividends only and they do not prefer wealth maximization. Below the age of 30 years according to the most important attributes, are not risk averter whereas people who are above 40 years of age are towards investing in safe investment avenues. Same time, they gave least importance to gender related issues, quick profiteering and showed keen believe in the market fundamentals. Finally, the results indicate that age, income, language and orientation of education have significant role in determining the investment style of an investor. Whereas financial literacy and accounting information are most influencing factors on the decision making behavior of individual investors.
Original languageEnglish
Pages (from-to)1-27
Number of pages27
JournalSS International Journal of Economics and Management
Issue number5
Publication statusPublished - Sep 2015
Externally publishedYes


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