Desing and Explanation of the Reduction of Consequences of the Behavioral Finance Biases on the Banking System Recession

Document Type : Original Article

Authors

1 Ph.D. Candidate in Financial Management, Islamic Azad University, North Tehran Branch, Tehran, Iran.

2 Associate prof, Department of Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran

3 Associate prof, Department of Management, North Tehran Branch, Islamic Azad University, Tehran, Iran.

Abstract

The main purpose of the research is to design a model for reducing the consequences of effective behavioral biases in the recession of the banking system. The main problem is the existence of various behavioral biases in the decision-making process. Banks are one of the vital and very important sectors of any economy. The importance of banks for the national economy becomes clear when we know that banking is a legal and global industry that has a great impact on the formation of relations between nations and governments. This research, in terms of nature and method of research, is a survey type research. In this research,  by using grounded theory, at first,  based on the collection of information through interviews of 74 experts, field notes, participatory observation, documents, abstractions, data production, data analysis with a systematic approach, open coding, axial coding, selective coding and finally after model validation evaluation with the approval of 222 subject experts and confirmatory factor analysis techniques of the first and second order and structural equation modelling, model with 4 dimensions, 20 categories and 239 indicators will be presented. Due to the factor load, the dimensions of the self-deception component have the highest factor load and higher priority. Also, the components of emotional effect and social interactions and innovative simplification are the next priorities, respectively.

Keywords


  1. 1.Abdolmaleki, H. (2016). Why do banks suffer from deficits and recessions? Tehran, Eghtesad News. (In Persian).

    2.Ariely, D. (2009). The End of Rational Economic. Harvard Business Review.195, 45-52.

    3.Ashraf Khan, A. (2018). A Behavioral Approach to Financial Supervision. Regulation and Central Banking, International Monetary Fund WP.18.178.

    4.Bachmann, K., De Giorgi, E., Hens, T. (2018). Published by John Wiley & Sons, Inc. Hoboken. New Jersey. Published simultaneously in Canada.

    1. Baghjari, M., Nilchi, M., Rasoolian, A. (2016). Examining the Return and the Return Volatility of Investment Industry in the Months of Ramadan and Muharram. ـJournal of Financial Management Perspective, 6(15), 25-41. (In Persian)

    6.Barberis, N., Thaler, R. (2003). A Survey of Behavioral Finance. Elsevier Science Ltd.

    7.Birnberg, J., G. (2011). A Proposed Framework for Behavioral Accounting Research. BEHAVIORAL RESEARCH IN ACCOUNTING.Vol. 23, No. 1. 1–43.

    8.Camerer, G. F., Lowenstein, G., Rabin, R. (2003). Advances in behaveioral Economics Princeton University press.

    9.Chandra, A. (2008). DECISION-MAKING IN THE STOCK MARKET: INCORPORATING PSYCHOLOGY WITH FINANCE. Department of Commerce & Business Studies Jamia Millia Islamia (A Central University) New Delhi-110025 India

    10.Enamul Kabir, Md. (2017).Why Behavioral Finance is Helpful for Investors to Decision Making Process?. Journal of Research in Business and Management, 4(12). 11-19.

    11.Fallah poor, S., abdollahi, GH.(2011). Determining and Prioritizing Behavior Biases of Investors in Tehran Stock Exchange Market: a Fuzzy AHP Approach, Journal of Financial Research, Vol. 13. 99-120. (In Persian)

    1. Farhadi, R., Akhoundi, O., MehrAvar, H. (2019). Dynamics of Herding Behavior and Momentum Effects: Evidence from the Iran Capital Market. Journal of Financial Management Perspective, 9(26), 121-145. (In Persian).

    13.Festinger, L., Henry W., Stanley S. (1956). When Prophecy Fails, Minneapolis. University of Minnesota Press.

    14.Ghalmagh, K., Yaghoobnezhad, A., Fallah Shams, M. (2017).  The effect of financial literacy on the behavioral fluctuations of investors in the Tehran Stock exchange. Journal of Financial Management Perspective.6(16), 75-94.. (In Persian).

    15.Gilad, B., Kaish, S. (1986). Handbook of Behavioral Microeconomics. JAI Press. Greenwich. CT.

    16.Jamshidi, N., Ghalibaf asl, H. (2019). Dynamics of the Behavior of Individual Investors in Tehran Stock Exchange. ـJournal of Financial Management Perspective, 9(25), 101-120 (In Persian).

    17.Khanman, D., Tversky, A. (1992). Advances in Prospect Theory. Cumulative representation of uncertainty. Journal of risk and uncertantity. 5. 297- 323.

    18.Knoll, M., (2010). The Role of Behavioral Economics and Behavioral Decision Making in Americans’ Retirement Savings Decisions. Social Security Bulletin. 70(4), 1-23.

    19.Maurice, A. (1953). Le Comportement de L'homme Rationnel Devant le Risque. Critique des Postulats ET Axiomes de L'ecole Americane. Econometrica. 21. 503-546.

    20.Mintzberg, H., (2001). Decision-Making: It’s not what You Think, Sloan Management Review, 11, 21-32.

    21.Missier, F D., Mantyla T., Bruin D. (2012). Decision-making Competence. Executive Functioning. And General Cognitive Abilities. Journal of Behavioral Decision Making. 25. 331–351.

    22.Nan-Chen H. (2004). An integrated data mining and behavioral scoring model for analyzing bank customers. Expert Systems with Applications. 27.623–633

    23.Nik, M., Nik, M. (2009). Behavioral finance vs traditional finance. Journal of Advances in Management.2(6).

    24.Pashtoon, R. (2016).   Behavioral finance and its impact on portfolio investment decisions–evidence. India. Savitribai phule Pune University.

    25.Raiffa, H. (1965). Decision Analysis. Introductory Lectures on Choices under Uncertainty.John Willy Publication.

    26.Saeedi, A., Farahanian, M. (2012). Fundamental of behavioral Economics and Finance. Bourse publications. Tehran.10-41.(in Persian)

    27.Sargent, T. (1987). Rational Expectations, Cambridge. Cambridge University Press.

    28.Schlosser, T., Dunning D., & Fetchenhauer D. (2013). What a Feeling: The Role of Immediate and Anticipated Emotions in Risky Decisions, Journal of Behavioral Decision Making, Vol 26, 13–30.

    29.Shefrin, H. (2008). Risk And Return In Behavioral Sdf-Based Asset Pricing Models. Journal of Investment Management. Vol. 6. No. 3. 1–18.

    30.Simon, H. (1987). Theories of Bounded Rationality. Behavioral economics and business organization. 2. 408-423.

    31.Tafazoli, F., (1996). History of Economic Beliefs. (From Plato to the contemporary period). Tehran: Ney, edition 9. (In Persian).

    32.Thaler, R.H. (1999). The End of Behaviorl Finance. Financial Analyst Journal. Vol. 55. No. 6.12-17