Psychological Factors on Investment Decision Making in Nepalese Stock Market

Abstract

This study explores the psychological factors influencing investment decisions in the Nepalese stock market, focusing on beliefs, self-confidence, regret and remorse, and loss aversion. The research adopts a descriptive design, utilizing structured questionnaires distributed among 150 retail investors to examine the interplay between cognitive biases and financial behaviors. Findings reveal that psychological factors significantly impact investment decisions, with loss aversion and regret being prominent drivers of conservative strategies, while self-confidence often leads to overconfident behaviors. Correlation and regression analyses demonstrate weak to moderate relationships between these psychological factors and investment outcomes, underscoring their nuanced effects. The study highlights the need for enhanced financial literacy programs and policy interventions to mitigate cognitive biases and promote rational decision-making in the Nepalese stock market. These insights contribute to the growing field of behavioral finance, offering region-specific evidence and practical implications for emerging markets.