A Comparative Study of the Impact of Behavioural Finance on Equity Investment Decisions: Evidence from Investors in Junagadh and Rajkot

Abstract

This study examines the influence of behavioural finance on equity investment decisions among individual investors in Junagadh and Rajkot. The research is based on primary data collected through structured questionnaires administered to 200 respondents, with an equal representation of 100 investors from each city. The study specifically focuses on key behavioural biases, including overconfidence, familiarity bias, regret aversion, and narrow framing, and further evaluates the impact of demographic factors such as age and education on these biases. Statistical tools such as independent sample t-tests and analysis of variance (ANOVA) were employed to analyse the data and identify significant differences between the two regions. The findings reveal that most behavioural biases do not significantly differ between investors in Junagadh and Rajkot; however, investors in Junagadh demonstrate a relatively higher tendency toward narrow framing in their investment decisions. On the other hand, demographic variables, particularly age and education, exert a more pronounced influence on investor behaviour in Rajkot, indicating notable regional variation. The study highlights the critical role of behavioural biases in shaping investment decisions and underscores the need for enhanced financial literacy and awareness programs to support rational decision-making among investors.