Behavioral Factors Affecting Investment Decision-Making in the Banking Sector: Evidence from the Colombo Stock Exchange

Abstract

This study explores the influence of behavioral factors on investment decision-making in bank stocks listed in the Colombo Stock Exchange (CSE). The research utilizes a quantitative approach, analyzing data from 100 active investors. Results indicate that demographic factors such as age and education significantly impact investment behavior, while behavioral biases like overconfidence and herding behavior play a critical role in decision-making. This study suggests strategies to mitigate the effects of these biases, contributing to a more efficient market. The findings are significant for financial institutions, investors, and policymakers aiming to enhance market stability and investor results.