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6 The relationship between behavioral factors with gender, age and level

6 The relationship between behavioral factors with gender, age and level

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At the significance level 5%, all sig. values are over 0.05 so there were not
enough evidences to confirm that there were differences between the psychological
factors with gender.

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Table 4.20:The relationship between Excessive Optimism, Herd Behavior, Psychology
of Risk, Over Confident and Age

At the significance level 5%, all sig. values are over 0.05 so there were not
enough evidences to confirm that there were differences between the psychological
factors with Age of investors.

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Table 4.21:The relationship between Excessive Optimism, Herd Behavior, Psychology
of Risk, Over Confident and Level

At the significance level 5%, all sig. values are over 0.05 so there were not
enough evidences to confirm that there were differences between the psychological
factors with level of investors
In this study, there were not enough evidences to confirm that there were
differences between the psychological factors with gender, age and level of investors.

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4.7 The effect of behavioral factors to investors’ target
Table 4.22: Dependent Variable
(0) = short term;

(1) = Other

There were 92 investors chose to invest in short term, occupy 43%, 122
investors chose to inves in long term, occupy 57%, the results showed that the
difference between 2 groups of investors were not too many, but with the situation of
current market,many investors chose the safe strategy, took no action, waiting for good
news, waiting for more positive signals from the market.
Table 4.23:

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Table 4.24 showed that -2 Log likelihood = 230.897 was not too high so we
acceptedthe model and Classification Table also proved it because the model measure
correctly 74.8%.
In Variables in the Equation table, Sig. value of Optimism and Herd are 0.000,
sig. value of Risk is 0.007, sig. value of Confident is 0.002, all Sig. values are smaller
0.05 so the regression coefficients are statistically significant. The order of impact as
follows: FAC1_1 (O) > FAC2_1 (H) > FAC4_1 (C) > FAC3_1 (R).
Regression equation

4.8 Hypothesis testing result
Based on the result of previous sections, all coefficients of 4 psychological
factors are over 0, all the factors have the positive impact on investors‟ target that
mean when investors more confidence, greater herd mentality, more optimistic and
more risk, they will increase in the short-term investment and vice versa.
Table 4.24
No
.

Hypothesis statement

Test result

1

H1 – Overconfidence has a positive impact on investors‟ target.

Supported

2

H2 – Excessive Optimism has a positive impact on investors‟ target.

Supported

3

H3 – Psychology of Risk has a negaive impact on investors‟ target.

Unsupported

4

H4 – Herd behavior has a positive impact on investors‟ target.

Supported

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H3 - Psychology of Risk has a negaive impact on investors‟ target–
unsupported, psychological of risk has a positive impact on investors‟ target, that
mean when investor are more risk, they will promote trade, make many buy and sell
orders to gain profit.
When degree of psychological factors increases, the probability that investors
choose to invest in short-term increase, means investors tend to believe that they can
make a profit from the difference short-term price

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CHAPTER5:CONCLUSION,IMPLICATIONS,AND LIMITATIONS
This chapter summarizes the main finding, solves implications of research
results and presents the limitation and direction for future research.
5.1Conclusion
Through the testing results and questionnaire analysis, the thesis has found the
quantitative evidences to confirm the existence of psychological factors of individual
investors in Vietnam stock market. Psychological model that measured individual
investors‟ behavior was constituted with 4factors, include 16 items: Overconfidence,
excessive optimism, psychology of risk and herd behavior.These psychological factors
can exist in a natural way that people are not often noticed, but they strongly impact
the decision chains. When degree of psychological factors increases, the probability
that investors choose to invest in short-term increase, means investors tend to believe
that they can make a profit from the difference short-term price
Behavioral finance actually equips for investors the new lens, allow them to
understand and overcome the psychological traps related to cognition and human
emotions. When investors recognize the psychological factors that may govern their
actions as well as its impact negatively on investment activities, they will tend to be
more cautious their decisions.
In general, this study will focus on discussing the significance of these factors
as well as suggesting several useful recommendations forlimiting the impact of
psychological factors to individual investors‟ target. Based on the outcomes of this
study, several major implications are discussed in this chapter.

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5.2 Managerial implications
This part aims to discuss major findings from the results of previous part.
First, the findings from this study showed that explaining the behavior of
individual investors can not rely on the standard finance theory, must be based on the
theory of behavioral finance and individual investors on the stock market always were
affected by psychological factors, this leads to the following consequences:
-

Investors were

influenced by many factors and psychological feelings.

Individual investors werevulnerability and changefrequently their psychology,
depended on their status and position.
-

The theory of technical analysis and fundamental analysis are not compelling
enough to explain the behavior of Vietnam stock market, instead, the core
theory should be used is the financial behavior.

-

Psychological factors and emotions play an important role when developing
regulatory policies and market management.
Second, the testing results in Chapter 4 show that herd behavior occurred on

Vietnam stock market.Herd behaviorimpliedthat the market was inefficient, distorted.
As a result, if the herd behavior is prolonged and systematic, it will make market
unstable, even lead to the collapse. Herd behavior was also one of the main reasons
that made the stock market growth rapidly from 2006 to 2007, and too cold from 2009
to 2011.
Herd behavior has created negative consequences for investors because they
always depend on the others‟ investment decisions, ignore their judgment and
analysis. Over time they will lose theirreason as well as quick-wittedtoresponse with

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changes of the market. In Vietnam stock market,it is more dangerous when there are
guidances, make price of the big investors, intent to corner the market.
At last, this thesis has explored the model measuresbehavior of individual
investors in Vietnam stock market was composed of 4 group elements, including
16items:Overconfidence, Excessive of Optimism, Psychology of Risk and Herd
behavior.This result implied psychological factors govered the behavior of investors,
that mean investors wereirrational like assumptions of standard financial. At the same
time, discovering model also dismissed the effectiveness of Vietnam stock market.
This result implied to construct an indicator of psychological of investor on the stock
market.
And beside normal financial knowledge, investors need to know emotional
finance to control emotions during investmenting.
Control the psychological factors in investment
Individual investors should avoid the following psychological deviations:
Avoid "stress in investment". The securities investment process is the process
that leads investors to a series of psychological conflict, whether they are aware or
unconscious. The findings of behavioral finance showed that, if investors are more
aware about the doubts and unconscious factors, they can deal more effectively with
anxiety and stress.
Avoid "Overconfidence". Investorsare too confident often underestimate the
risk of holding stock and usually hold a low diversification levelportfolios.
Overconfidence of investors‟ behavior is the main cause of the bubble in the stock
market. The combination of overconfidence and pessimism make investors assess

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excessive reliability level of their knowledge, underestimate risks and overestimate the
ability to adjust the events, lead to the large transactions and speculative bubbles.
More excessive credulity, morerisk incurs.
Enhanced knowledge for investors
To ensure the development of Vietnam stock market sustainability, the question
is how to enhance training and disseminating knowledge and skills investment for
investors, especially the individual investors.
For investors, beside equipped the knowledge of securities analysis, we
recommend organize training courses on behavioral finance to help investors evaluate
and analyze themselves the behavioral characteristics and then propose specific
strategies and investment, avoid short-term investments, avoid the traps related to
awareness and emotion. When individual investors identify how to psychological
factors can influence and govern their actions will help investors insulate individual
psychological factors and limit deviations in making investment decision.
Recommendations to the Stock exchange and securities firms:
Develop a measurable system of indicators of individual investors’ psychological
factors in Vietnam stock market
The study results confirmed investors' behaviors were influenced by 4
individual psychological factors: overconfidence, excessive optimism, herd behavior
and psychology of risk. These factors can be measured through 16 items, have been
explored and tested. Based on the results of this research, we propose, beside the
quantitative indicators which were built by the stock exchange such as HNX30 (Hanoi
Stock Exchange build), VN30 (HCM Stock Exchange build), VIR50 (Securities

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Investment Report buid), we propose the stock exchanges should develop a
measurable system of indicators behavioral of individual investors through a
questionnaire as a reference index key.
Form derivatives market
Vietnam stock market has formed and developed over 13 years. Currently, we
basically had enough conditions to form derivative securities markets. The research
results of chapter 4 showed deviations in the behavior of individual investors,
typically herd behavior. Thus, to limit the herd mentality, apart from transparency of
information and control information, to improve the operation mechanism of the stock
price through enhance the relationship between stock market with other markets.
To enhance the performance of the market, to transparency and control
informations, should improve the mechanism operation of the stock price through
strengthening the regulation and interconnection from the stock market to other
market. The development of the derivatives market will create favorable conditions
for investors to hedge and limit the deviations in the behavior of investors. At the
same time, derivative markets will also enable the management agencies state to
regulate and manage the stock market and bond better. However, the other side of
derivative market is without good control will lead to speculation, market
manipulation, even lead to the crisis of the stock market. Therefore, the state should
develop policies to ensure the implementation of the derivative instruments is
sustainable. Some policies have to heed such as: limit the amount and the purchase
price, the demand for capital and mortgage when trading the derivative securities.
Enhance the transparency of Vietnam stock market