Behavioral Finance and Investment Decisions By Master of Business Administration Students at United States International University- Africa

Abstract

The main purpose of this study is to explore the impact of Behavioral Finance on investment decisions by MBA students at United States International University- Africa. The specific objectives of this study is to assess the role of psychological biases on Master of Business Administration student’s investment decision making, to establish the impact of gender differences on Master of Business Administration student’s investment decisions, and to determine the influence of financial literacy by Master of Business Administration students in investment decision at United States International University -Africa. The research used a causal and explanatory survey design to investigate the relationship among the independent variables which are psychological biases, gender differences, financial literacy, and MBA student's investment decisions as dependent variables. Primary data collection was done via questionnaire that was administered through a drop and pick of 203 questionnaires with both open-ended and close-ended questions where 85 percent of the responses were recorded. The study research used Pearson's correlation, regression analysis for each of the specific objectives and data was analysed by IBM SPSS. A multiple linear regression model was used to evaluate the relationship between three independent variables which psychological biases, gender differences, and financial literacy and dependent variable MBA students. The results were presented in figures, and tables. Based on the specific objective of the study to assess the role of psychological biases on MBA student’s investment decision making, the Pearson correlation results showed a negative relationship which implies that psychological biases and MBA student’s decision making are negatively correlated, however, it is not statistically significant since the P-value is greater than 0.05. This presents that psychological biases and MBA student's concentration have an inverse relationship with the MBA student's investment decision making and vice versa. Secondly, based on the specific objective of the study to establish the impact of gender differences on the MBA student investment decision, the results indicated a positive relationship which implies that MBA student investment decision and gender differences are positively correlated, however, it is not statistically significant since the P-value is greater than 0.05. This presents that MBA students investment decision increase with every increase in the gender difference. To determine the influence of financial literacy on behavioural finance of MBA student’s investment decision making, the Pearson correlation results showed a negative relationship as which implies that financial literacy on behavioural finance and MBA student’s decision making are negatively correlated, however, it is not statistically significant since the P-value is greater than 0.05. This presents that the influence of financial literacy and MBA student's concentration have an inverse relationship with the MBA student's investment decision making and vice versa. The study concluded a higher presence of psychological bias leads to a decrease in the investment decision of MBA students. The research also concluded that when gender differences increase, the student’s investment decision increases and vice versa. Likewise, financial literacy on behavioural finance concluded that a higher presence of financial literacy leads to a decrease in the investment decision of MBA students.