Financial behavior tendencies of individual investors: The case of Dhaka Stock Exchange

Individual investor behavior is related to the investment decisions that investors will make on their own accounts. Various tools can also be used to make this decision. The market structure and information system among these tools have an important role in investment decisions. This research aims to identify the factors that influence the investment decisions of individual investors regarding the Dhaka Stock Exchange (DSE). In order to achieve this goal, this study examined 5 variables such as financial indicators, independent sources of information, financial needs, advocate recommendations, and self-image/firm image coincidence that are found to affect individual investors' behavior in the literature. The research was conducted with the questionnaire method. The survey was conducted with 300 investors investing in DSE. The questionnaire includes 5 main variables and 27 sub-factors related to them with respondents' gender as a demographic factor. The obtained data were analyzed with SPSS 26 and AMOS 24 programs. In this study, the descriptive analysis is used to achieve the research objectives, and the exploratory factor analysis (EFA) is employed to extract the most significant factors influencing the DSE individual investors and also confirmatory factor analysis (CFA) is utilized to validate the extracted factors with a goodness-of-fit measurement model. Finally, the Friedman rank test has been used to test the research hypothesis. In the research, it is seen that there is a significant relationship between the factors that affect the investment decisions of investors. These factors influencing the investment decisions of individual investors have been found to be as follows: ethical behavior of companies, the efficiency of financial markets, the public reputation of companies, past performance of companies' stock, expected dividends, independent information about companies, fluctuations in stock indices, and investment consultancy. With this research, individual investors will be able to evaluate the possible results of their investment decisions under the current conditions and make the most appropriate investment decision. This study also serves as a guide for companies, policymakers, and investment advisors.