Impact of Investment Behavior on Loss Aversion among Youth Investors
Keywords:
Loss Aversion, Regret Aversion, Herding Behavior, Availability Bias, Mental Accounting,, Behavioral Finance, NEPSE, Youth InvestorsAbstract
This study examines the impact of investment behavior on loss aversion among youth investors trading on the Nepal Stock Exchange (NEPSE). Drawing on behavioral finance theory, the research investigates how cognitive biases specifically availability bias, regret aversion, mental accounting, and herding behavior influence loss aversion in young investors. A structured questionnaire was administered to 222 youth investors, and data were analyzed using descriptive statistics, Kendall's tau correlation, and multiple linear regression. The findings reveal that the overall model is statistically significant (F = 34.599, p < .001), explaining approximately 37.8% of the variance in loss aversion (Adjusted R² = .378). Among the predictors, regret aversion (β = .472, p < .001) and herding behavior (β = .245, p < .001) emerged as significant determinants of loss aversion, while availability bias and mental accounting did not demonstrate significant effects. The study contributes to the understanding of youth investment psychology in emerging capital markets and underscores the importance of financial literacy and behavioral intervention programs.
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