Individual investor behavior and the impact of behavioral biases on the Moroccan stock market

Abstract

The investment process requires investors to make different types of decisions, and the quality of these decisions determines the outcome of the investment process. Standard finance and behavioral finance theories present different views of investment decision-making, based on the concept of rationality. Behavioral finance theories indicate that investors do not act totally rationally when making investment decisions, due to various biases. The aim of the study is to identify the factors based on behavioral finance that influence investors' investment decisions in the Moroccan stock market. For this, the questionnaires were sent directly to individual investors. They were chosen at random. 300 questionnaires sent to retail investors; our sample is therefore 112 investors who responded to complete responses. The analytical tools of exploratory factor analysis and confirmatory factor analysis were used to analyze the data, based on a positivist epistemological stance. According to the results of the study, there are five behavioral factors that influence the investment decisions of individual investors. Users can use this information to better understand investors' motivations, and thus offer them investment opportunities better suited to their needs.

Keywords: Individual investors, stock market, behavioral biases, investor performance, behavioral finance. Classification JEL: G11, G40,G41

Paper type : Empirical research.