Neurofinance and investment behaviour in bursa Malaysia

Abstract

The role of neurofinance is significant for understanding the principal neural mechanism of investors’ decision making to explore deeply the work of emotions in the financial decision-making process. This research sought to explore the impact of neurofinance and decision making in Bursa Malaysia. The primary focus of this research was to examine the relationships between personalities, emotion, decision making in the neurofinance perspective. A total of 30 investors in Bursa Malaysia were drawn by random sampling. Two instruments were developed to collect data: the first instrument was questionnaire adopted from the international standard of personality traits test and the second instrument was the electroencephalogram (EEG) experiment. The findings indicated that personality and emotion influence investment decision. Also, the study found that elements of personality traits (agreeableness, neuroticism, and openness to experience) influence investment decision making, while emotional arousal influences investment decision making and investor behaviour on stock trading. The research finding contributes to the body of knowledge of neurofinance, extending the understanding of neurofinance from past research. The finding of this study provides some inputs an understanding of decision making in Bursa Malaysia to investor. Consequently, the central authority can formulate rules and regulation to prevent market violation from investors’ emotions and biases. It also enriches the theory by adding additional constructs and testing the model of investment decision in the context of the neurofinance application in Bursa Malaysia. Lastly, the finding of this study contributes towards providing an evaluation model of neurofinance and investment behaviour on Bursa Malaysia.