Herding Behavior in Nepali Stock Market: Empirical Evidences based on Investors from NEPSE

Risal, Nischal; Khatiwada, Nitesh

doi:10.3126/nccj.v4i1.24746

Cited by 10 publications

(8 citation statements)

References 14 publications

(15 reference statements)

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“…These findings are in line with the assertions of Komalasari et al (2021), who in their study conducted an extensive review of the literature regarding herding and found socio-economic factors as least influential towards herding. Contrary, these results contradict several previous studies that posited socioeconomic factors as the significant driver of herd behavior (Nair and Yermal, 2017; Wong, 2018; Risal and Khatiwada, 2019).…”

Section: Discussioncontrasting

confidence: 99%

“…Individual investors are also influenced by a sociological force (Nair and Yermal, 2017; Wong, 2018; Risal and Khatiwada, 2019). Social influence plays a critical role in formulating an individual persons' insight about others, with respect to the target behavior and whether they expect one individual to perform that behavior or not (Ajzen, 1991).…”

Section: Review Of Literaturementioning

confidence: 99%

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What make investors herd while investing in the Indian stock market? A hybrid approach

Sachdeva

Lehal

Gupta³

et al. 2021

RBF

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PurposeIn recent years, significant research has focused on the question of whether severe market periods are accompanied by herding behavior. As herding behavior is a considerable cause of the speculative bubble and leads to stock market deviations from their basic values it is necessary to examine the motivators which led to herding behavior among investors. The paper aims to discuss this issue.Design/methodology/approachIn this study, the authors performed a two-phase analysis to address the research questions of the study. In the first phase, for text analysis NVivo software was used to identify the factors driving herding behavior among Indian stock investors. The analysis of a text was performed using word frequency analysis. While in the second phase, the Fuzzy-AHP analysis techniques were employed to examine the relative importance of all the factors determined and assign priorities to the factors extracted.FindingsResults of the study depicted Investor Cognitive Psychology (ICP), Market Information (MI), Stock Characteristics (SC) as the top-ranked factors driving herding behavior, while Socio-Economic Factors (SEF) emerged as the least important factor driving herding behavior.Research limitations/implicationsThe current study was undertaken among stock investors from North India only. Moreover, numerous factors are not part of the study but might significantly influence the investors' herding behaviors.Practical implicationsComprehending the influences of the different factors discussed in the study would enable stock investors to be more aware of their investment choices and not resort to herd behavior. This research enables decision-makers to understand the reasons for herd activity and helps them act accordingly to improve the stock market's performance.Originality/valueThe current study will provide an inclusive overview of herding behavior motivators among Indian stock investors. This study's results can be extremely useful for both academics and policymakers to gain some insight into the functioning of the Indian stock market.

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Section: Discussioncontrasting

confidence: 99%

Section: Review Of Literaturementioning

confidence: 99%

What make investors herd while investing in the Indian stock market? A hybrid approach

Sachdeva

Lehal

Gupta³

et al. 2021

RBF

View full text Add to dashboard Cite

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“…The paper found that political instability is the major challenge and the overloaded information, which is difficult to filter, made decision-making harder for Nepalese investors, which was contradictory to Risal and Khatiwada (2019). They found that the hasty decisions making process and the herd behaviour among the Nepalese investors made them go for wrong investment decisions.…”

Section: Theme 5: Investor's Investment Decisions Go Wrongmentioning

confidence: 99%

“…To make such accurate decisions, investors are faced with different challenges. Risal and Khatiwada (2019) found that Nepalese investors were doing hasty decisions with herd behaviour while investing in NEPSE. Hence, the following opinions forwarded by interviewees reflect the challenges in making investment decisions at NEPSE: Frankly speaking, the unnecessary flow of information (cannot say relevant or irrelevant) especially on social media, makes investment decisions more complex.…”

Section: Theme 3: Investor's Priorities In Company Selection For Investingmentioning

confidence: 99%

Qualitative Analysis on Investment Decisions of Nepalese Stock Market Investors

Vaidya

2021

JBMR

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The paper attempts to examine the experience of the Nepalese investors at the secondary market. The paper explored the investment decisions process of the Nepalese investors. The paper has adopted the grounded theory to generate the theory from the data collected from the semi-structured interview from the stock market investors having an academic background in management. The findings revealed that the investors are eager to invest in the stock market and go for a better experience from their trading at the NEPSE floor. The study exposed a mixed opinion in context to the understanding of the macroeconomic aspects and their influence on investment decisions. The investors forwarded that there is no relation between their investment decision-making process and the macroeconomic factors, while some of the investors stated that they see a connection of the economy with the stock market directly or indirectly. The study came out that the major concern of the Nepalese investors is a fundamental aspect of the listed companies while selecting for an investment. At the same time, investors stated that they go for technical analysis or follow the market trend for the short-term trading at NEPSE floor. The investors are seen at one point that the unstable political situation and insider trading have been major challenges, in context to the Nepalese stock market. Finally, the excessive flow of information related to the listed companies either with some validity or not, makes an investor’s investment decisions go wrong.

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“…Risal (2016) had also explained the scenario and the importance of capital market development in Nepal. In addition, Risal and Khatiwada (2019) had explained the herding behavior in Nepalese capital market. The result had revealed the significant relationship of hasty decision with herd behavior.…”

Section: Thematic Analysismentioning

confidence: 99%

A Critical Analysis of Relationship between Gold Prices and NEPSE Index

Risal¹

2020

Pravaha

Self Cite

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The investors’ prioritization towards the gold investment and capital market investment is really interesting issue. To clear the issue in the context of Nepal,the research paper seeks the relationship between gold prices on Nepalese capital market. The descriptive and analytical research design has been adopted in the study. The study is based on quantitative approach. The data has been collected from July 2015 to July 2018. The information on market index and gold price has been collected for the same period. The information has been collected from the annual reports of NEPSE, Nepal Gem and Jewellery Association (NEGJA),Nepal gold market and Federation of Nepal Gold and Silver Dealer’s Association(FENEGOSIDA). The comparative analyses of gold market and capital market have shown the direct relationship between these two markets. The investors ‘tendency to switch to gold investment is found risky. The gold prices and interest rates have influence on NEPSE.

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Herding Behavior in Nepali Stock Market: Empirical Evidences based on Investors from NEPSE

Cited by 10 publications

References 14 publications

What make investors herd while investing in the Indian stock market? A hybrid approach

What make investors herd while investing in the Indian stock market? A hybrid approach

Qualitative Analysis on Investment Decisions of Nepalese Stock Market Investors

A Critical Analysis of Relationship between Gold Prices and NEPSE Index

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