Financial Development and Instability: A Theoretical Perspective

Chittedi, Krishna Reddy

doi:10.4172/2168-9458.1000123

Cited by 2 publications

(4 citation statements)

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“…However, empirical evidence revealed that capital market liberalization does not bring the benefits promised by the theory. Rather, it further contributes to the degree of financial market volatility (Chittedi, 2014) and instability (worsening of market efficiency) especially in thin stock markets in developing countries with worldwide cross-boarders influx of irrational and rational exuberance and pessimism that created a contagion of opinions and bubbles in financial markets (Ocampo & Stiglitz, 2008). In no exception, the Malaysian stock market has been very sensitive to both internal and external economic and financial crises.…”

Section: Malaysian Stock Market Performancementioning

confidence: 99%

“…Fourth, no taxes, no transaction costs, and no danger of bankruptcy. Fifth, competitive pressure among economic agents will keep securities fairly priced as any opportunity to realize an excess profit is exploited without delay and thus disappears (Chittedi, 2014;Fama, 1970). These will collectively form an equilibrium financial market with perfect and competitive under conditions of uncertainty (LeRoy, 1989).…”

Section: Introductionmentioning

confidence: 99%

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Behavioural finance perspectives on Malaysian stock market efficiency

Tuyon¹,

Ahmad²

2016

Borsa Istanbul Review

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This paper provides historical, theoretical, and empirical syntheses in understanding the rationality of investors, stock prices, and stock market efficiency behaviour in the theoretical lenses of behavioural finance paradigm. The inquiry is guided by multidisciplinary behaviouralrelated theories. The analyses employed a long span of Bursa Malaysia stock market data from 1977 to 2014 along the different phases of economic development and market states. The tests confirmed the presence of asymmetric dynamic behaviour of prices predictability as well as risk and return relationships across different market states, risk states and quantiles data segments. The efficiency tests show trends of an adaptive pattern of weak market efficiency across various economic phases and market states. Collectively, these evidences lend support to boundedadaptive rational of investors' behaviour, dynamic stock price behaviour, and accordingly forming bounded-adaptive market efficiency.

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Section: Malaysian Stock Market Performancementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Behavioural finance perspectives on Malaysian stock market efficiency

Tuyon¹,

Ahmad²

2016

Borsa Istanbul Review

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“…According to Bernstein (1998), there is evidence of repeated patterns of irrationality, inconsistency, and incompetence in the way human beings arrive at their decisions and choices when faced with uncertainty. The presence of these phenomena in the financial market is the probable reason why the failure of risk management system is based on the neoclassical assumptions of normal distributions (Chittedi, 2014). Within the literature, researches in the financial market are moving towards the behavioural aspects of investment rather than adhering to the fundamental or traditional approaches (Listyarti & Suryani, 2014;Olokoyo, Oyewo, & Babajide, 2014;Sandberg, Hutter, Richetin, & Conner, 2016).…”

Section: Introductionmentioning

confidence: 99%

“…While the importance of behavioural finance has been highlighted by scholars (Tuyon & Ahmad, 2016;Chittedi, 2014), there has been a lack of studies that focusses on India. In their observations of the Indian market, Kumar and Goyal (2016) noted that investors followed a rational decision making process when investing but the behavioural biases of the individuals can arise at various stages of the decision making.…”

Section: Introductionmentioning

confidence: 99%

Extending the Theory of Planned Behaviour: Impact of Past Behavioural Biases on the Investment Decision of Indian Investors

Raut¹,

Das²,

Kumar³

2018

AJBA

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Manuscript type: Research paper. Research aims: This paper aims to investigate the applicability of the Theory of Planned Behaviour (TPB) in examining individuals' behavioural intention to invest in the capital market. This study extends on the TPB model by considering the role of past behavioural biases (PBB) as a factor in influencing the individuals' behavioural investment intentions. Design/ Methodology/ Approach: This paper employs a hypothesis deductive approach. The research model is tested through structural equation modelling (SEM). Data were collected from 396 individuals in Eastern India through a survey and then analysed. Research findings:The results of this study demonstrate the applicability of the TPB in predicting the individuals' behavioural intention to invest in the capital market. This study indicates that attitude toward behaviour, subjective norms and perceived behavioural control are significantly associated with behavioural intentions. The findings signify that the inclusion of past PBB can improve the predictive power of the model. behavioural intentions. It also extends the applicability of the TPB in the area of investment decision making. Practitioner/ Policy implications: The findings of this study reveal that behavioural biases are inseparable from normal human beings' decision making. The reason is because behavioural biases can distort the individuals' fundamental valuation of stocks. Therefore, it is imperative that fund managers incorporate this dimension as part of their risk modelling to enhance investment analysis and strategies. The outcome of this study can be used as a guideline for understanding the factors and programmes that need to be instilled to increase online stock trading among current and future investors. Research limitation:This study is limited to non-financial sectors due to measurement limitations.

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Financial Development and Instability: A Theoretical Perspective

Cited by 2 publications

References 57 publications

Behavioural finance perspectives on Malaysian stock market efficiency

Behavioural finance perspectives on Malaysian stock market efficiency

Extending the Theory of Planned Behaviour: Impact of Past Behavioural Biases on the Investment Decision of Indian Investors

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