International Journal of Advanced in Management, Technology and Engineering Sciences ISSN NO : 2249-7455

Behavioral Finance: A Bibliometric Analysis of the Literature

by

Sunil Kushwaha*1, Sushma Singh2

*
Research Scholar, Department of Management, Bhilai Institute of Technology, Durg (C.G.) Pin-491001,
2
Sr. Executive, Department of Accounts, Bhilai Institute of Technology, Durg (C.G.) Pin-491001, India,

* [email protected]
2 [email protected]

Abstract

Behavioral Finance is flourishing with its own principle and methodology and has focused on the
rationality of investor’s investment planning and decisions. Most of the researchers are coming from
western part of the globe. The purpose of the study is to conduct a systematic literature review and
understand the progress made in last 10 years in the field of behavioral finance. The period of 2007 to
2016 is selected basically to update the latest study in the field of behavioral finance. Bibliometric
analysis is applied to identify the trends in behavioural finance, number of influencing papers, top
contributing authors, most popular keywords used and citation measures. This study will provide food for
thought for the researchers who want to work in the field of behavioral finance. This study will also
enable managers and policy makers in understanding the ongoing research in the field of behavioral
finance.

Key Terms: Behavioral Finance, Bibliometric Analysis, Literature Review

1. Introduction

Behavioural Finance is one of the dynamic and fully developed fields which have its own principle and
methodology (Redhead, 2008). Behavioural finance came in existence due to limitations of traditional
theories and finance to support the investment and saving decisions (De Bondt & Thaler, 1985; Werner
DeBondt, 2010).While traditional finance formulates the investment strategy whereas behavioural finance
focuses on the decision process of its execution (MacKenzie, Fabian, & Lucia, 2006). Many of the key
variables in behavioural models are neither observable nor measurable directly to researchers analysing
data, thus most of the empirical studies in the field of behavioural finance adopt proxies in attempt to

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capture or measure the effect of such variables (Darren, 2015). According to analysis of (Huang Jim Yuh,
2015), during the period 1995 to 2013, in this period of 20 years, the study in the area of behavioural
finance was in 124 journals and 347 articles in which 650 authors were involved. Participation in this
field is limited to from USA, Germany, Spain, England, China Israel, Australia, but there are limited
scholars from south East Asia economy like India.

The main objectives of this paper are

1) To conduct a systematic literature review for past 10 years ( 2007 to 2016)
2) To conduct bibliometric analysis of selected papers.

This paper is structured into four additional sections. The coming section represents the systematic
literature review which helps us to understand the progress in the field of behavioral finance. The second
section represents bibliometric analysis, the third section represents the conclusions and recommendations
and fourth section represents unique contribution, limitations and future research and directions.

2. Related Empirical Literature

Systematic review of past studies done by researchers to select, evaluate their contribution, analyse the
data used have a specific methodology (Denyer & Tranfield, 2009).The systematic Literature review steps
followed in this paper have been adopted using the guidelines on Tranfield et al.,(2003).

Step1: Planning the Review

At this phase, the relevance and size of the literature is planned along with the boundaries of the topic. In
the current paper, main focus is on the articles published in top peer reviewed journals in the field of
behavioral finance. Information and Library Network (INFLIBNET) database was used for searching
keywords in databases and publishers like Emerald, Elsevier, Science Direct etc. Along with Text books
and Reference Books though keyword search using keywords Behavioural Finance, Psychology,
Decision Making, Determinants, Pricing Inefficiencies, Sentiment Shifts. Important papers for the
required topic were selected.

Step2: Need for Review

The objective of conducting literature review is to explore the area of behavioral finance and identify the
future research directions. The literature review will help to explore the gaps in terms of area of research,
methodology adopted, findings and suggestions.

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Step3: Preparation of proposal for review

Detailed review of the papers published in JSTOR, Springer, Elseveir and other top financial management
journals to understand the observations and findings of the research in the said area for the present study
and further a review proposal is formulated on the basis of collected papers.

Step4: Conducting Review

Behavioral finance is one of the top research areas in the field of investment management for the
academician, investors, fund managers and regulators (GeorgeTauchen & Zhoub, 2011). Considering the
enormous challenges in developing predicting models due to large number of determinants and factors
influencing the investment decisions, it is still challenge for the researchers to explore and confirm the
models.

3. Bibliometric Analysis

This will help in quantitative and qualitative analysis of existing literatures. In this paper bibliometric
analysis is done on behavioral finance in order to analyse the current and past area of research and will
help to identify gap if any so that guidance for future study can be framed. The below table 1 presents the
papers analysed with their title and key findings. The journals are also tabulated for the given papers.

Table 1: Review of selected papers

Sr. Year of
Authors Article Title Key Findings Journal
No. Publication
The impact of well-
documented biases such as
overconfidence and the
Behavioural European
disposition effect on
Avanidhar Finance: A Financial
1 2007 market makers and the
Subrahmanyam Review and Management
concomitant implications
Synthesis ,
for transaction costs would
seem to be a valuable topic
for research.
Factor analysis revealed
five underlying dimensions
Attitudes and
of financial attitudes and
behaviour in
behaviour: anxiety, International
everyday
Fünfgeld Brigitteand interests in financial issues, Journal of
2 finance: 2009
Wang Mei decision styles, need for Bank
evidence
precautionary savings, and Marketing
from
spending tendency. Cluster
Switzerland
analysis segmented the
respondents into five

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subgroups based on these

dimensions with an
ascending order of specific
needs for financial
products. Gender, age, and
education were found to
have significant impacts.
The paper highlights
numerous benefits that
behavioural finance
research can contribute to
Werner What can
the financial industry, but Qualitative
DeBondt,William behavioural
at the same time there is an Research in
3 Forbes,Paul finance teach 2010
evident discrepancy Financial
Hamalainen and Yaz us about
between the academic and Markets
Gulnur Muradoglu finance?
the professional world
when it comes to utilising
behavioural finance
research.
Neurofinance is a very
young discipline. It tries to
relate the brain processes to
the investment behaviour.
Most of the researches in
Neurofinance
the domain of neurofinance Studies in
and
4 Shalini Kalra Sahi 2012 focus on trading behaviour. Economics
investment
It would be interesting to and Finance
behaviour
explore the workings of the
brain for other investment
behaviours too like
personal financial planning
decisions, etc.
The primary input to
behavioural finance has
been from experimental
psychology. Methods
developed within sociology
Behavioural
such as surveys,
finance: the
interviews, participant
role of Review of
Harvey, Muradoglu, observation, focus groups
5 psychologica 2012 Behavioural
G., & Nigel have not had the same
l factors in Finance
degree of influence.
financial
Typically, these methods
decisions
are even more expensive
than experimental ones and
so costs of using them may
be one reason for their lack
of impact.

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Relevant behaviors
identified, including those
related to establishing a
bank account,
increasing savings, using
credit wisely, avoiding
over indebtedness,
applying for micro finance
loans, adopting new
Influencing
technologies, reducing
positive
chances of fraud, choosing
Financial Journal of
Nancy R. Lee and the right insurance,
6 behaviour: 2012 Social
Margaret Miller reporting abuse, and
the social Marketing
shopping around and
Marketing
comparing offers. Potential
solution
target audiences were
broad, ranging from sex
workers in India, to
farmers in “self-help”
groups in Kenya, to girls
aged 10-18 in Mongolia, to
the homeless in San
Francisco, to households
on tea estates in India
This article reveals the
aims of recognition and
Behavioural
emotional factors on
Finance: The Procedia -
market movements
Egidijus Bikas Emergence Social and
7 2013 focusing on a limited
Petras Dubinskas and Behavioral
number of investor
Development Sciences
rationality and explains the
Trends
psychological effects of
investing activities.
High co movement
momentum portfolios have
significantly higher future
Style
returns than low co
investing,co Journal of
Sunil Wahal, M.Deni movement momentum
23 movement 2013 Financial
zYavuz portfolios. Overall, our
and return Economics
results suggest that style
predictability
investing plays a role in the
predictability of asset
returns.
Managerial CEO overconfidence is
overconfiden significantly and negatively
Irene Wei Kiong Ting ce, related International
Hooi Hooi Lean government to corporate financing Journal of
8 2014
Qian Long Kweh intervention decision; second, a higher Managerial
Noor Azlinna Azizan and degree of managerial Finance
corporate overconfidence would
financing result in lower leverage in

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decision GLCs, whereas the effect

does not significantly exist
in NGLCs; third, a larger
ownership of government
in a firm will reduce the
negative effect of
managerial overconfidence
on corporate financing
decision; fourth, the
moderating effect of
government ownership on
the association between
managerial overconfidence
and corporate financing
decision in GLCs is more
effective than NGLCs.
The conducted research has
proved that when making
decisions under the
uncertainty and risk
Behavioural conditions, people
finance: experience the effect of Procedia -
Andrius Guzavicius
corporate different illusions, Social and
9 Rita Vilke 2014
social emotions, false perception Behavioral
Vytautas Barkauskas
responsibility of information and other Sciences
approach "irrational" factors.
Corporate social
responsibility reflects a
new role of business in
society
The results indicate that
Effects of
trading is influenced by the
Behavioural
investors’ irrational Procedia
Camelia Oprean Finance on
10 2014 behavior. Thus, the Economics
Cristina Tanasescu Emerging
rationality hypothesis can and Finance
Capital
be rejected for both capital
Markets
markets.
Data analysis confirms a
relationship between the
learning opportunities
Self-
provided by a role, and
Colin Milligan, Rosa regulated
learning undertaken Journal of
Pia Fontana, Allison learning
11 2015 Regression analysis Workplace
Littlejohn and behaviour in
identifies three key SRL Learning
Anoush Margaryan the finance
behaviours that appear to
industry
mediate this relationship:
task interest/value, task
strategies.

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Behavioral Experiments complement

finance: the findings from empirical
insights from studies in behavioral Review of
12 Duxbury Darren experiments 2015 finance by avoiding some Behavioural
I: theory and of the limitations or Finance
financial assumptions implicit in
markets such studies.
More research papers in
behavioral finance are
emerging, making it a
significant area of study.
Starting
Most of the papers can be
points for a International
Huang Jim Yuh,Shieh classified as empirical or
new Journal of
13 Joseph C.P., Littlejohn 2015 theory. The number of
researcher in Managerial
Allisonand Kao papers in the review class
behavioral Finance
should be increased to
Finance
assist scholars and
professionals in
understanding behavioral
finance and its application.
Business objectives
together with a large
number of firm-level
characteristics, including
Finance-
firm age, size, industry and
seeking
sales, profits, growth and
behaviour
exports, significantly affect International
and
Xiang Dong both finance-seeking Journal of
14 outcomes for 2015
Worthington Andrew behaviour and outcomes. Managerial
small- and
The authors find evidence Finance
medium-
that the pecking-order and
sized
agency cost theories of
enterprises
capital structure at least
partly explain the financial
behaviour of Australian
SMEs
Data analysis confirms a
relationship between the
learning opportunities
provided by a role, and
learning undertaken.
Self-
Regression analysis
regulated
Milligan Colin,Fontana identifies three key SRL Journal of
learning
15 Rosa Pia, Littlejohn 2015 behaviours that appear to Workplace
behaviour in
Allisonand Margaryan mediate this relationship: Learning
the finance
task interest/value, task
industry
strategies and self-
evaluation. Together they
provide an insight into the
learning processes that
occur during intentional

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informal learning.

A one percentage increase

in intangible returns for
small firms (large firms)
lead to a 2.33% decrease
(0.70% increase) in
monthly returns over the
Information
next 12 months. The results Journal of
Yen-Cheng Chang, environment
22 2015 are robust to firm Banking &
Hung-Wen Cheng and investor
characteristics adjustments, Finance
behavior
alternative measures of
firm information
environment and private
information, idiosyncratic
risk, and microstructure
effects.
Overconfidence leads
investors to predict their
skills over estimate and
find the belief that they
cannot market timing. International
The effect of
Detection and mitigation of Journal of
Mahmoud Lari managerial
confidence too, is a Accounting
16 Dashtbayaz, Shaban overconfiden 2016
fundamental step in and
Mohammadi ce on
designing the foundations Economics
investment
of a good financial plan. Studies
Too much trust in their
own people, the strongest
findings in the psychology
of judgment.
CEO overconfidence is
significantly and negatively
related to corporate
Managerial
financing decision a higher
overconfiden
degree of managerial
Irene Wei Kiong Ting ce, International
overconfidence would
Hooi Hooi Lean government Journal of
17 2016 result in lower leverage a
Qian Long Kweh intervention Managerial
larger ownership of
Noor Azlinna Azizan and corporate Finance
government in a firm will
financing
reduce the negative effect
decision
of managerial
overconfidence on
corporate financing

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decision
the moderating effect of
government ownership on
the association between
managerial overconfidence
and corporate financing
decision is more effective
The tests confirmed the
presence of asymmetric
dynamic behaviour of
prices predictability as well
as risk and return
relationships across
Behavioural
different market states, risk
finance
states and quantiles data Borsa
perspectives
18 (Tuyon & Zamri, 2016) 2016 segments. Collectively, _Istanbul
on Malaysian
these evidences lend Review
stock market
support to bounded
efficiency
adaptive rational of
investors' behaviour,
dynamic stock price
behaviour, and accordingly
forming bounded-adaptive
market efficiency
Behavioral
factors
influencing
individual Preliminary results show
investor’s the height positive relation International
Dr. Bilal Aziz investment of heuristics on the Journal of
19 Muhammad Abdullah decision and 2016 investment performance Research in
khan performance, while prospect not affect Finance and
Evidence the investment Marketing
from performance.
Pakistan
Stock
Exchange.
The results revealed that
emotion intelligence is
having significance impact
International
Investor’s on investment decisions
Journal of
Emotional and plays a vital role in
Academic
Muhammad Tanvir, Intelligence selection of securities.
Research in
20 Muhammad Sufyan, and Impact 2016 Investors are having self-
Economics
Aitzaz Ahsan on awareness, self-
and
Investment management, motivation
Management
Decision and empathy but low
Sciences
concentration on
relationship-management.
The overall study revealed

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low emotion intelligence

and much influence by
decision.
The study concluded that
this multidisciplinary
research area investigates
the issues that impact the
Review International
decision-making process
Paper On Journal Of
and explains the irrational
Behavioural Marketing,
Geetika Madaan nature of individuals,
21 Biases In 2016 Financial
Sukheja groups and organizations.
Financial Services &
Behavioral finance tries to
Decision- Management
address those
Making Research
psychological traps that are
confronted while making
decisions under
uncertainty.
Source: Author’s own compilation

The table 2 presents the areas of research focus. It shows that majority of researchers have focused on
quantitative modeling and literature review. Limited numbers of work are seen in areas of conceptual
paper, case study and empirical study which show an area for future study.
Table 2: Areas of Research Focus
No of
Authors Type of Research
Papers
Subrahmanyam (2007), DeBondt et.al
(2010), Kalra S (2012), Muradoglu et.
Review 7
al (2012), Duxbury D (2015), Yuh J H
et. al (2015), Sukheja (2016),

Lee N et. al (2012), Wahal S et. al

(2013), Ting I W K et. al (2014),
Guzavicius A et. al (2014), Oprean C Quantitative
8
et. al (2014), Tuyon et. al (2016), Modelling
Aziz B et. al (2016), Tanvir M et. al
(2016),

Milligan C et. al (2015), Dong X et.

al (2015), Chang Y C et. al (2015), Empirical Survey 4
Ting et. al (2016),
Brigitteand W et. al (2009), Bikas E
et. al (2013), Colin M et. al (2015), Case Study 4
Dashtbayaz M L et. al (2016),

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Kukacka J et. al (2013), Aron et. al

(2012), Boussaidi R (2013), Doker et. Conceptual 4
al (2015)

Source: Author’s own compilation

The table 3 presents the distribution of literature on the basis of country of research. It can be analysed in
the mentioned table that most of the research are performed in developed countries and very limited
papers are available in developing and Asian countries.
Table 3: Selected Studies in context of different Countries
Sr. No. Country Researchers
1 Australia Dong et. al (2015)
2 India Sahi K S (2012), Sukheja G M (2016)
3 Iran Lari M et. al (2016)
4 Italy Chang Y C ( 2015)
Bikas E et. al (2013), Guzavicius A et
5 Lithuania
al (2014)
Ting IWK et. al (2014), Ting IWK et.
6 Malaysia
al (2016), Tuyon J et. al (2016)
Aziz B et. al (2016), Tanvir M et. al
7 Pakistan
(2016)
Romania and
8 Oprean C et. al (2014)
Brazil
9 Switzerland Brigitteand F et. al (2015)
10 Taiwan Yuh H J et. al (2015)
DeBondt et. al (2010), Harvey et. al
11 United Kingdom (2012), Milligan C et. al (2015), Darren
D (2015), Colin M et. al (2015)
Subrahmanyam A (2007), Lee N et. al
12 USA
(2012), Wahal S et. al (2013)

Source: Author’s own compilation

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Citation Measure analysis is conducted for top 10 papers in terms of the maximum number of citation on
Google Scholar Citation index in Table 4. The citations represent the number of times the paper have
been referred or cited in other papers. The paper of Subrahmanyam A (2007), have maximum of 305
citations, followed by Brigitteand et. al (2009) with 79 citations and so on.
Table 4: Top 10 papers: Citation Measure
Google
Year of
Sr. No. Authors Article Title Journal Country Citation
Publication
Index
Behavioural European
Avanidhar
1 Finance: A Review 2007 Financial USA 305
Subrahmanyam
and Synthesis Management,
Attitudes and
International
Fünfgeld behaviour in
Journal of
2 Brigitteand Wang everyday finance: 2009 Switzerland 79
Bank
Mei evidence from
Marketing
Switzerland
Style investing,co
Journal of
Sunil Wahal, movement and
3 2013 Financial usa 55
M.Deni zYavuz return
Economics
predictability
Behavioural
Harvey, finance: the role of Review of
United
4 Muradoglu, G., psychological 2012 Behavioural 33
Kingdom
& Nigel factors in financial Finance
decisions
Werner
DeBondt,William What can Qualitative
Forbes,Paul behavioural Research in United
5 2010 24
Hamalainen and finance teach us Financial Kingdom
Yaz Gulnur about finance? Markets
Muradoglu
Influencing
Nancy R. Lee positive Financial Journal of
6 and Margaret behaviour: the 2012 Social USA 21
Miller social Marketing Marketing
solution
Behavioural
Procedia -
Finance: The
Egidijus Bikas Social and
7 Emergence and 2013 Lithuania 21
Petras Dubinskas Behavioral
Development
Sciences
Trends
Neurofinance and Studies in
Shalini Kalra
8 investment 2012 Economics India 16
Sahi
behaviour and Finance

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Behavioural
finance Borsa
Jasman Tuyon
9 perspectives on 2016 _Istanbul Malaysia 11
Zamri Ahmad
Malaysian stock Review
market efficiency
Colin Milligan,
Rosa Pia Self-regulated
Journal of
Fontana, Allison learning behaviour United
10 2015 Workplace 10
Littlejohn and in the finance Kingdom
Learning
Anoush industry
Margaryan

4. Conclusion and Recommendations

The present study presents the structure review of papers in the field of behavioral finance which is fully
developed and emerging area of research. In the past 10 years with the selected literature under study it
can be concluded that there are limited study in country like India and other developing nations. The
current review has captured the past research publications, outlined the present status and shows the
future research directions. The analysis shows that there limited number of researchers in the field of
behavioral finance and it is expected that in future more and more researchers will add to this area. The
kind of research shows that trend is towards review papers and quantitative modeling and thus provides
future scope in the areas like conceptual as well as empirical study in the area of behavioral finance and
investment decisions.

References
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research methods , 671-689.

GeorgeTauchen, & Zhoub, H. (2011). Realized jumps on financial markets and predicting credit spreads.
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Huang Jim Yuh, S. J.-C. (2015). Starting points for a new researcher in behavioural finance. International
Journal of Managerial Finance , 12 (1), 92-103.

MacKenzie, D., Fabian, M., & Lucia, S. (2006). Do Economists Make Markets? . Princeton: Princeton
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Redhead, K. (2008). Personal Finance and Investment. united states: Routledge.

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Tuyon, J., & Zamri, A. (2016). Behavioural finance perspectives on Malaysian stock market efficiency.
Borsa _Istanbul Review .

Werner DeBondt, W. F. (2010). What can behavioural finance teach us about finance? Qualitative
Research in Financial Markets , 2 (1), 29-36.

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