Behavioral Finance: Hippocrates Personality and Behavioral of Islamic Finance on Investment Decision Gen Z
DOI:
https://doi.org/10.14421/grieb.2023.111-10Keywords:
Hippocrates Personality, Financial Behaviour, Islamic Finance, Investment Decision, Gen ZAbstract
This study aims to analyze Hippocrates' personality and an investor's financial behavior in making investment decisions. A quantitative research design was used to test the research hypotheses. The respondents consisted of Muslim students from universities in Bandung who belong to the category of Generation Z. The data analysis technique used was the Structural Equation Model (SEM) AMOS. The Hippocrates personality has a significant effect on financial behavior, and financial behavior has a significant effect on investment decisions. However, the Hippocrates personality does not have a significant effect on investment decisions. The findings of this research indicate that financial behavior needs to be improved by applying Sharia financial concepts so that it can support investment activities that are in line with Sharia principles. Personality Hippocrates emphasized choosing investments that are in line with the student's personality characteristics. This personality type is more inclined towards the behavior of calculating the appropriate risks and benefits of the investments made. The novelty of this research is demonstrated by the Islamic financial perspective which examines the relationship between Hippocrates' personality and financial behavior on investment decision-making. The expected implication is that Islamic finance can increase investment by knowing the Hippocratic personality type and financial behavior among Gen Z Muslims.
Originality/Value: The originality of this research is found in studying personality types according to Hippocrates (129-200 BC) and the perspective of Islamic Finance in making investment decisions.
Downloads
Abstract viewed: 300 times
|
PDF downloaded = 259 times
References
Adibulasyhar, M. (2019). Klasifikasi karakteristik kepribadian manusia berdasarkan tipologi hippocrates-galenus menggunakan metode FK-NN. Universitas Muhammadiyah Gresik.
Agarwal, S., Qian, W., Tan, R., Agarwal, S., Qian, W., & Tan, R. (2020). Investment. Household Finance: A Functional Approach, 139–173.
Mand, A. A., Janor, H., Rahim, R. A., & Sarmidi, T. (2023). Herding behavior and stock market conditions. PSU Research Review, 7(2), 105–116.
Ahmad, M. (2021). The role of recognition-based heuristics in investment management activities: Are expert investors immune? A systematic literature review. Qualitative Research In Financial Markets.
Ahmad, M., & Shah, S. Z. A. (2020). Overconfidence heuristic-driven bias in investment decision-making and performance: Mediating effects of risk perception and moderating effects of financial literacy. Journal of Economic And Administrative Sciences, 38(1), 60–90.
Antony, A., & Joseph, A. I. (2017). Influence of behavioral factors affecting investment decision: An AHP analysis. Metamorphosis, 16(2), 107–114.
Archer, K. J., Lemeshow, S., & Hosmer, D. W. (2007). Goodness-of-fit tests for logistic regression models when data are collected using a complex sampling design. Computational Statistics & Data Analysis, 51(9), 4450–4464.
Archer, S., Karim, R. A. A., & Sundararajan, V. (2010). Supervisory, regulatory, and capital adequacy implications of profit-sharing investment accounts in Islamic finance. Journal Of Islamic Accounting and Business Research, 1(1), 10–31.
Awang, Z., Afthanorhan, A., & Asri, M. A. M. (2015). Parametric and non parametric approach in structural equation modeling (sem): The application of bootstrapping. Modern Applied Science, 9(9), 58.
Ayaa, M. M., Peprah, W. K., Mensah, M. O., Owusu-Sekyere, A. B., & Daniel, B. (2022). Influence of heuristic techniques and biases in investment decision-making: A conceptual analysis and directions for future research. International Journal of Academic Research in Business and Social Sciences, 12, 1252–1267.
Bakar, S., & Yi, A. N. C. (2016). The impact of psychological factors on investors’ decision making in Malaysian stock market: A case of Klang Valley and Pahang. Procedia Economics And Finance, 35, 319–328.
Baker, L. H., Shaffrey, L. C., Sutton, R. T., Weisheimer, A., & Scaife, A. A. (2018). An intercomparison of skill and overconfidence/underconfidence of the Wintertime North Atlantic Oscillation in multimodel seasonal forecasts. Geophysical Research Letters, 45(15), 7808–7817.
Durukan, M. B. (2002). The relationship between IPO returns and factors influencing IPO performance: Case of Istanbul Stock Exchange. Managerial Finance, 28(2), 18–38.
Barber, B. M., & Odean, T. (2000). Trading is hazardous to your wealth: The common stock investment performance of individual investors. The Journal of Finance, 55(2), 773–806.
Barberis, N., & Thaler, R. (2002). A survey of behavioral finance NBER working paper 9222. Addison-Wesley Publishing Company, Inc.
Barno, L. J. (2020). Effect of herding factor on investment decisions among small and micro enterprises in Nairobi County, Kenya.
BKPM. (2022). Investasi Indonesia bergerak bangkit pasca pandemi. Badan Koordinasi Penanaman Modal (BKPM), 1–6.
Cao, M. M., Nguyen, N. T., & Tran, T. T. (2021). Behavioral factors on individual investors’ decision making and investment performance: A survey from the Vietnam Stock Market. The Journal of Asian Finance, Economics and Business, 8(3), 845–853.
Chang, C. H. (2011). IPO underpricing: A social comparison perspective. International Review of Economics & Finance, 20(3), 367–375.
Chhapra, I. U., Kashif, M., Rehan, R., & Bai, A. (2018). An empirical investigation of investor’s behavioral biases on financial decision making. Asian Journal of Empirical Research, 8(3), 99-109. https://doi.org/10.18488/journal.1007/2018.7.3/1007.3.99.109
Cyert, R. M., & March, J. G. (1963). A behavioral theory of the firm. Prentice Hall.
Dangol, J., & Manandhar, R. (2020). Impact of heuristics on investment decisions: The moderating role of locus of control. Journal of Business and Social Sciences Research, 5(1), 1–14.
Demirer, R., Kutan, A. M., & Chen, C. D. (2010). Do investors herd in emerging stock markets? Evidence from the Taiwanese Market. Journal of Economic Behavior & Organization, 76(2), 283–295.
Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2020). The global findex database 2017: Measuring financial inclusion and opportunities to expand access to and use of financial services. The World Bank Economic Review, 34(Supplement), S2-S8. https://doi.org/10.1093/wber/lhz013
Devenow, A., & Welch, I. (1996). Rational herding in financial economics. European Economic Review, 40(3–5), 603–615.
Enoma A. A., & Mustapha I. (2010). Factor analysis of investment decisions in Nigerian insurance companies. Interdisciplinary Journal of Contemporary Research in Business, 2(8), 108–120.
Erdougan, H. H. (2020). Does prospect theory explain investment decisions: A comparative study. Journal of Management and Economic Studies, 2(4), 188–197.
Fachrudin, K. A., & Latifah, S. (2022). Relationship between individual characteristics, neurotic personality, personal financial distress, and financial behavior. Cogent Business & Management, 9(1), 2105565.
Fahey, C. J. (2008). Altogether governed by humors: The four ancient temperaments in Shakespeare.
Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417.
Fama, E. F., & French, K. R. (2015). Incremental variables and the investment opportunity set. Journal of Financial Economics, 117(3), 470–488.
George, J. M., & Dane, E. (2016). Affect, emotion, and decision making. Organizational Behavior and Human Decision Processes, 136, 47–55.
Ghozali, I. (2016). Aplikasi analisis multivariete dengan program IBM SPSS 23.
Grabowski, M. (2015). Research on wearable, immersive augmented reality (wiar) adoption in maritime navigation. The Journal of Navigation, 68(3), 453–464.
Hashem, S. Q., & Abdeljawad, I. (2018). Islamic banks’ resilience to systemic risks: Myth or reality – evidence from Bangladesh. In Management of Islamic finance: Principle, practice, and performance (Vol. 19, pp. 37–68). Emerald Publishing Limited.
Hayat, A., & Anwar, M. (2016). Impact of behavioral biases on investment decision: Moderating role of financial literacy. Moderating Role of Financial Literacy, September(23).
Heale, R., & Twycross, A. (2015). Validity and reliability in quantitative studies. Evidence-Based Nursing, 18(3), 66–67.
Hirshleifer, D., Levi, Y., Lourie, B., & Teoh, S. H. (2019). Decision fatigue and heuristic analyst forecasts. Journal of Financial Economics, 133(1), 83–98.
Howart, E. (1988). Mood differences between the four galen personality types: Choleric, sanguine, phlegmatic, melancholic. Personality and Individual Differences, 9(1), 173–175.
Hussain, M., Shahmoradi, A., & Turk, R. (2016). An overview of Islamic finance. Journal of International Commerce, Economics and Policy, 7(01), 1650003.
Irton, I., Khairawati, S., & Murtadlo, M. B. (2021). Investor behavior in Islamic capital markets: Study on muslim students. Jurnal Manajemen dan Bisnis (Performa), 18(3), 45–60.
Jahanzeb, A., & Saif-ur-Rehman. (2012). Implication of behavioral finance in investment decision-making process. Information Management and Business Review, 4(10), 532-536. https://doi.org/10.22610/imbr.v4i10.1009
Jain, J., Walia, N., & Gupta, S. (2020). Evaluation of behavioral biases affecting investment decision making of individual equity investors by fuzzy analytic hierarchy process. Review of Behavioral Finance, 12(3), 297–314.
Javed, H., Bagh, T., & Razzaq, S. (2017). Herding effects, over confidence, availability bias and representativeness as behavioral determinants of perceived investment performance: An empirical evidence from Pakistan Stock Exchange (PSX). Journal of Global Economics, 6(1), 1–13.
Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-292. https://doi.org/10.2307/1914185
Kahneman, D., & Tversky, A. (1981). The simulation heuristic. National Technical Information Service.
Kalsum, U., Sarita, B., Cahyono, E., & Wawo, A. B. (2018). Effects of financial literacy and investment experience on access to finance and investment decisions in small enterprises in Southeast Sulawesi. International Journal of Scientific and Engineering Research, 9(2), 849–857.
Kammer, M. A., Norat, M. M., Pinon, M. M., Prasad, A., Towe, M. C. M., & Zeidane, M. Z. (2015). Islamic finance: Opportunities, challenges, and policy options.
Kapoor, K. (2016). An empirical research on the investment behaviour of rural and urban investors towards various investment avenues: A case study of Moradabad Region. TMIMT International Journal, 2(2), 151–156.
Kartini, K., & Nahda, K. (2021). Behavioral biases on investment decision: A case study in Indonesia. The Journal of Asian Finance, Economics and Business, 8(3), 1231–1240.
Kassim, A. A. M., Mohamed, J., Jahari, N. A., Nasyikin, N., & Zain, M. (2019). Personal saving behavior among muslim employees. International Journal of Academic Research in Business and Social Sciences, 9(11), 236–253.
Kataria, C. D., & Choudhary, S. (2015). Herding behavior in financial market: Critical literature review. International Research Journal of Commerce Arts and Science, 6(12), 16–26.
Khairunizam, & Isbanah, Y. (2019). Pengaruh financial literacy dan behavioral finance factors terhadap keputusan investasi (Studi terhadap investor saham syariah pada galeri investasi syariah UIN Sunan Ampel Surabaya). Jurnal Ilmu Manajemen (JIM), 7(2).
Lin, A. Y., & Lin, Y. N. (2014). Herding of institutional investors and margin traders on extreme market movements. International Review of Economics & Finance, 33, 186–198.
Linciano, N., & Soccorso, P. (2017). Challenges in ensuring financial competencies.
Lintner, G. (1998). Behavioral finance: Why investors make bad decisions. The Planner, 13(1), 7–8.
Littauer, F. (2004). Personality plus (Thirty-Eig). Fleming H. Revell.
Liu, X., Liu, B., & Han, X. (2019). Analysis of herd effect of investor’s behavior from the perspective of behavioral finance. International Conference on Management, Education Technology and Economics (ICMETE 2019), 559–563.
Ljungqvist, A., Nanda, V., & Singh, R. (2006). Hot markets, investor sentiment, and ipo pricing. The Journal of Business, 79(4), 1667–1702.
Loughran, T., & Ritter, J. R. (2002). Why don’t issuers get upset about leaving money on the table in Ipos? The Review of Financial Studies, 15(2), 413–444.
Mahanthe, J., & Sugathadasa, D. D. K. (2018). The impact of behavioural factors on investment decision making in Colombo Stock Exchange. The International Journal of Business & Management.
Masini, A., & Menichetti, E. (2013). Investment decisions in the renewable energy sector: An analysis of non-financial drivers. Technological Forecasting and Social Change, 80(3), 510–524.
Menkhoff, L. (2002). Institutional investors: The external costs of a successful innovation. Journal of Economic Issues, 36(4), 907–933.
Mittal, S. K. (2022). Behavior biases and investment decision: Theoretical and research framework. Qualitative Research in Financial Markets, 14(2), 213–228.
Morgan, E. J. (1987). Tax, incentives and small business investment. International Small Business Journal, 5(4), 23–33.
Mueller, R. O., & Hancock, G. R. (2019). Structural equation modeling. In The reviewer’s guide to quantitative methods in the social sciences (pp. 445–456). Routledge.
Muneer, S. (2012). Materialization of behavioral finance and behavioral portfolio theory: A brief review. Journal of Economics and Behavioral Studies, 4(8), 431–435.
Nareswari, N., Balqista, A. S., & Negoro, N. P. (2021). The the impact of behavioral aspects on investment decision making. Jurnal Manajemen dan Keuangan, 10(1), 15–27.
Newell, G., & Seabrook, R. (2006). Factors influencing hotel investment decision making. Journal of Property Investment & Finance, 24(4), 279–294.
Niroomand, F., Metghalchi, M., & Hajilee, M. (2020). Efficient market hypothesis: A ruinous implication for Portugese Stock Market. Journal of Economics and Finance, 44, 749–763.
Noah, S., & Lingga, M. T. P. (2020). The effect of behavioral factors in investor’s investment decision. Conference Series, 3(1), 398–413.
Novak, I. (2019). Efficient market hypothesis: Case of the Croatian Capital Market. Intereulaweast: Journal for the International and European Law, Economics and Market Integrations, 6(1), 3–20.
Novianggie, V., & Asandimitra, N. (2019). The influence of behavioral bias, cognitive bias, and emotional bias on investment decision for college students with financial literacy as the moderating variable. International Journal of Academic Research in Accounting, Finance and Management Sciences, 9(2), 92-107. http://dx.doi.org/10.6007/IJARAFMS/v9-i2/6045
Olsen, R. A. (1998). Behavioral finance and its implications for stock-price volatility. Financial Analysts Journal, 54(2), 10–18.
Pandya, V., & Sisombat, S. (2017). Impacts of foreign direct investment on economic growth: Empirical evidence from australian economy. International Journal of Economics and Finance, 9(5), 121–131.
Panjievich, A. A. (2023). Expanding opportunities to attract investments from the global investment market to the economy of Uzbekistan. European Journal of Business Startups and Open Society, 3(2), 20–26.
Parveen, S., & Siddiqui, M. A. (2018). Anchoring heuristic, disposition effect and overconfidence bias in investors: A case of Pakistan Stock Exchange. Abasyn Journal of Social Sciences, 11(2), 280–294.
Puteri, H. E., Arinda, N., Dewi, S., & Sari, G. (2022). Self-control and consumptive behavior control in purchasing internet services for social networking among Muslim millennials. European Journal of Humanities and Social Sciences, 2(6), 118–129.
Rajeshwaran, N. (2020). The impact of behavioural factors on investment decision making and performance of cse investors in Eastern Province of Sri Lanka. Economic Research, 8(1).
Rao, A. S., & Lakkol, S. G. (2022). A review on personality models and investment decisions. Journal of Behavioral and Experimental Finance, 35, 100691.
Rasheed, M. H., Rafique, A., Zahid, T., & Akhtar, M. W. (2018). Factors influencing investor’s decision making in Pakistan: Moderating the role of locus of control. Review Of Behavioral Finance, 10(1), 70–87.
Ricciardi, V., & Simon, H. K. (2000). What is behavioral finance? Business, Education & Technology Journal, 2(2), 1–9.
Rossiter, C. (2019). The supreme court and the commander in chief. Cornell University Press.
Sabbaghi, O. (2022). The impact of news on the volatility of ESG firms. Global Finance Journal, 51, 100570.
Saeed, K., Ali, S., Shahid, M. U., Iqbal, N., & Hafeez, Y. (2019). Enabling the usability heuristics of agile base systems to improve quality of local software industry. Mehran University Research Journal of Engineering & Technology, 38(2), 341–350.
Sairafi, K., Selleby, K., & Ståhl, T. (2008). Behavioral finance: The student investor.
Scholz, T. M., & Vyugina, D. (2019). Looking into the future: What we are expecting from generation Z. In Generations Z in Europe (pp. 277–284). Emerald Publishing Limited.
Shah, S. Z. A., Ahmad, M., & Mahmood, F. (2018). Heuristic biases in investment decision-making and perceived market efficiency: A survey at the Pakistan Stock Exchange. Qualitative Research in Financial Markets, 10(1), 85–110.
Sharpe, W. F. (2005). The Journal of Investment Consulting.
Skagerlund, K., Forsblad, M., Slovic, P., & Västfjäll, D. (2020). The affect heuristic and risk perception: Stability across elicitation methods and individual cognitive abilities. Frontiers in Psychology, 11, 970.
Slovic, P. (1972). Psychological study of human judgment: Implications for investment decision making. The Journal of Finance, 27(4), 779–799.
Stanković, J., Marković, I., & Stojanović, M. (2015). Investment strategy optimization using technical analysis and predictive modeling in emerging markets. Procedia Economics and Finance, 19, 51–62.
Statman, M. (2014). Behavioral finance: Finance with normal people. Borsa Istanbul Review, 14(2), 65–73.
Nurlaili, & Swastika, P. (2021). How middle-low income Muslim group financially reacts in pandemic crisis. Journal of Islamic Finance, 10(2), 124–133.
Tamara, D., Arianto, A. Y., Marzuki, E., & Zulhamdani, Z. (2022). The effect of financial literacy, herding behavior and risk tolerance on investment decisions. Budapest International Research and Critics Institute-Journal (Birci-Journal), 5(4), 30259–30271.
Trejos, C., Van Deemen, A., Rodriguez, Y. E., & Gomez, J. M. (2019). Overconfidence and disposition effect in the stock market: A micro world based setting. Journal of Behavioral and Experimental Finance, 21, 61–69.
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. In New Series, 185(4157).
Venezia, I., Nashikkar, A., & Shapira, Z. (2011). Firm specific and macro herding by professional and amateur investors and their effects on market volatility. Journal of Banking & Finance, 35(7), 1599–1609.
Wen, Y. F. (2010). Capital investment decision, corporate governance, and prospect theory. Procedia-Social and Behavioral Sciences, 5, 116–126.
Wilson, R. (1997). Islamic finance and ethical investment. International Journal of Social Economics, 24(11), 1325–1342.
Yao, J., Ma, C., & He, W. P. (2014). Investor herding behaviour of Chinese Stock Market. International Review Of Economics & Finance, 29, 12–29.
Yuwono, W., Sari, N. P., Lasmawati, N., Daniel, R., & Maulana, A. (2023). Analysis of behavioral finance affecting in investment decision. International Journal of Economics, Business and Innovation Research, 2(3), 63–76.
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Global Review of Islamic Economics and Business is licensed under a
Creative Commons Attribution-ShareAlike 4.0 International License
