Original Research

Behavioural factors in the financial decisions of young Mozambicans

J. H. Mota, A. C. Moreira, A. J. Cossa
South African Journal of Business Management | Vol 46, No 4 | a105 | DOI: https://doi.org/10.4102/sajbm.v46i4.105 | © 2018 J. H. Mota, A. C. Moreira, A. J. Cossa | This work is licensed under CC Attribution 4.0
Submitted: 29 March 2018 | Published: 31 December 2015

About the author(s)

J. H. Mota, Department of Economics, Management and Industrial Engineering, University of Aveiro, Campus Universitário de Santiago, Portugal
A. C. Moreira, Department of Economics, Management and Industrial Engineering, University of Aveiro, Campus Universitário de Santiago, Portugal
A. J. Cossa, Department of Economics, Management and Industrial Engineering, University of Aveiro, Campus Universitário de Santiago, Portugal

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Abstract

This paper seeks to analyse how behavioural factors influence the financial decisions of young Mozambican investors. The standard theory of finance assumes investors make rational financial decisions, seeking to minimise risk and maximise their expected utility. However, several studies have been conducted criticizing the assumption that investors are rational, opening the way to behavioural finance theory. According to the behavioural finance approach, financial decisions made by individuals are not based on rational thinking and their risk taking behaviour depends on their beliefs or feelings. Our analysis reveals that young Mozambicans are risk averse towards certain gains and risk lovers when faced with certain losses; they are excessively optimistic about the future; they use the information available as an anchor for their estimates; and they are so overconfident that they believe estimates in uncertain situations to be more accurate than they really are.


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