Factors Influencing Retail Investors’ Trading Behaviour in the Thai Stock Market

Abstract

This paper investigates trading behaviour among Thai retail investors in 2016. Using detailed survey data from 491 investors, we examine the characteristics and behavioural patterns that lead to investor bias. Empirical results in the behavioural finance literature indicate that retail investors may not behave reasonably. Behavioural biases may influence investor decisions and affect financial markets. These studies, however, are limited to subsamples of the overall investor groups studied and mainly focus on developed markets. We find that biases are common among investors and that men are more overconfident than women. Moreover, we discover that investors with more experience in trading are less likely to hold their stocks for long periods of time. Further, investors aged 45 and younger hold more diversified portfolios. Another finding is that participants with an income of more than 50,000 Baht a month and/or who employ a number of brokers hold more diversified portfolios. This evidence is consistent with the findings that have been reported for Turkey, India, and Vietnam, indicating that demographic factors are useful for distinguishing between investors in terms of the level of overconfidence bias they exhibit. This result confirms that demographic factors play a role in differentiating and classifying retail investors and should motivate future researchers to consider these factors in their research.

Challenges of Integrating Emotion into a Theoretical Framework in a Higher Education Investment Course

“…If the stocks' price plummets, they will hold the loser asset and expect the price to be corrected. For this decision, overconfidence bias could be caused (Barber & Odean, 2001;Kinari, 2016;Paisarn et al, 2021). Therefore, the emotion of disappointment and overconfidence is the concept of perceived emotion observed in this research.…”

“…The simulation approach could enhance the perceived emotion in investment, but knowing these feelings (disappointment and overconfidence) is not enough to avoid emotional bias in the investment decision. Retail investors are usually prone to emotional bias (Paisarn et al, 2021;Zahera & Bansal, 2018) evolved into fear of missing out as social media information drives their investment decision (Shiva et al, 2020). Specifically, in behavioural finance, two emotional biases related to this research are regret aversion and overconfidence bias, which are well documented in empirical findings (Fishburn, 2013;Jain et al, 2021;Quaicoe & Eleke-Aboagye, 2021;Shah & Malik, 2021).…”

“…The number of unique investors IDs reached 5.7 million in June 2021, and Pradita University pays attention to investment courses because of the complexity of teaching this subject. Retail investors faced a severe problem in their investment decision as behavioural biases were found occasionally due to a lack of emotional control when facing market volatility (Paisarn et al, 2021). The fear and asymmetric information also played a pivotal role in causing this behaviour (Shiva et al, 2020).…”

“…Therefore, this theory was insufficient because, in the investment process, students will be exposed to a dynamic environment (the market) that could affect their investment decision. This situation could be troublesome from a behavioural finance perspective because the market's volatility without proper emotional knowledge would result in several biases in investors' decisions (Kahneman et al, 1991;Monteiro & Bressan, 2021;Paisarn et al, 2021).…”

The Influence of Financial Behaviour on Financial Risk Tolerance In Investment Decision: A Conceptual Paper

“…journal.ump.edu.my/ijim ◄ Financial behaviour aspect can be determined by several indicators. For example, Paisarn et. al (2021) indicated that demographic factors such as gender, years of experience in trading, age, and income play their roles in shaping trading behaviour amongst stock market investors.…”