Muhammad, Farhan (2025) Behavioural Biases and Decision Making in Pakistani Stock Exchange Investment: The Moderating Role of Financial Literacy. Masters thesis, Asia e University.
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Abstract
This study examines the influence of behavioral biases on investment decision making, with particular attention to the moderating role of financial literacy. The research focuses on two groups of investors in Karachi, Pakistan: 230 individual (retail) investors and 150 institutional investors. A quantitative research approach was adopted, using a structured questionnaire for data collection. The data were analyzed through SPSS and Jamovi, employing reliability analysis, independent sample t-tests, and moderation analysis to evaluate the relationships between behavioral biases, financial literacy, and investment decisions. The findings reveal that behavioral biases—such as heuristics, representativeness, availability bias, and regret aversion— significantly affect investment behavior. The results also indicate notable differences between individual and institutional investors in how these biases influence their decisions. Furthermore, financial literacy was found to moderate these effects, suggesting that investors with higher financial knowledge are better equipped to make rational investment choices. Although the study is limited to a specific geographical area and relies on self-reported data, which may involve some bias, its findings offer valuable implications for financial advisors, policymakers, and investor education programs. Enhancing financial literacy through targeted training and awareness initiatives can reduce the impact of cognitive biases and improve investment outcomes.
| Item Type: | Thesis (Masters) |
|---|---|
| Uncontrolled Keywords: | Behavioral biases, heuristic biases, representativeness bias, cognitive biases, financial literacy |
| Subjects: | H Social Sciences > HG Finance |
| Divisions: | School of Graduate Studies |
| Depositing User: | Nor Aisyah Ghazali |
| Date Deposited: | 14 Apr 2026 04:18 |
| Last Modified: | 14 Apr 2026 04:47 |
| URI: | http://ur.aeu.edu.my/id/eprint/1474 |
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