Human brain and financial behavior: a neurofinance perspective

Abstract

Purpose This study aims to review the relationship between neurological processes and financial behavior from an interdisciplinary perspective. Individual decision-making is influenced by cognitive and affective biases; hence, it becomes pertinent to understand the origin of these biases. Neurofinance is an emerging field of finance budding from neuroeconomics and explains the relationship between human brain activity and financial behavior, drawn from interdisciplinary fields, including neurology, psychology and finance. Design/methodology/approach This conceptual paper extensively reviews the extant literature and performs meta-analysis to attain its research objectives. Findings The paper highlights the use of neuroimaging techniques in mapping the brain areas to help understand the processes in the higher cognitive areas of brain. The paper raises some new questions regarding individual preferences and choices while making financial or non-financial decisions. Originality/value The special focus on dysfunctions arising in brain because of injury and their impact on decision-making is also a key point in this paper and is summarized using meta-analytic forest plot. The existing literature provides instances where emotional processing is altered by injury in brain and may lead to more advantageous decisions, especially in risky situations.

From Challenges to Creativity: Enhancing SMEs’ Resilience in the Context of COVID-19

“…This paper reports on the findings of a rapid review as recommended by the systematic methodology of [10,12,[20][21][22][23][24]. Due to the merits of transparency, replicability, and rigor, this methodology is gaining prominence in social sciences as well [11,12,23,25,26].…”

Fase Ketiga Teori Manajemen Keuangan: Neurofinance Sebagai Sebuah Pendekatan Baru

“…Sumber: (Srivastava et al, 2019) Setelah dikaji dan ditinjau oleh Miendlarzewska et al (2019), konsep neurofinance memiliki penjelasan istilah atau konsep turunannya. Untuk penelitian di bidang neurofinance dapat menggunakan istilah atau konsep-konsep tersebut, dan dapat pula mengembangkan konsep yang telah ada.…”

“…Sumber: (Miendlarzewska et al, 2019) Neurofinance: Peluang Riset di Masa Mendatang Jika Tabel 4 tersebut dijabarkan dalam bentuk grafik terlihat bahwa masih sangat minim penelitian terkait neurofinance. Penelitian terkait neurofinance yang tercatat pada penelitian Srivastava et al, (2019) berjumlah 15 persen penelitian tentang area otak yang terlibat dalam pengambilan keputusan keuangan serta secara jumlah masih terbatas publikasi terkait neurofinance. Srivastava et al (2019) juga menjelaskan bahwa "…there may be studies that are not included in this meta-analysis and could be undertaken by future research studies".…”

“…Penelitian terkait neurofinance yang tercatat pada penelitian Srivastava et al, (2019) berjumlah 15 persen penelitian tentang area otak yang terlibat dalam pengambilan keputusan keuangan serta secara jumlah masih terbatas publikasi terkait neurofinance. Srivastava et al (2019) juga menjelaskan bahwa "…there may be studies that are not included in this meta-analysis and could be undertaken by future research studies". Neurofinance, dalam tahap awal penelitian, berkaitan dengan pemahaman proses neurologis di otak investor saat membuat keputusan keuangan (Teall, 2018).…”

“…Perdebatan antara pihak traditional finance dengan behavioral finance memunculkan perkembangan dari teori pada ilmu manajemen khususnya bagian keuangan. Menurut Srivastava et al (2019) dan Bloomfield (2010), pendekatan tradisional adalah pendekatan yang rasionalis, pandangan ini menjelaskan bahwa manusia dapat mengevaluasi bobot probabilitas hasil di masa depan dan maksimisasi utilitasnya. Sedangkan pendekatan keperilakuan menjelaskan bahwa manusia tidak sepenuhnya rasional sehingga dapat mengambil keputusan yang tidak rasional.…”