Impact of Neurotransmitters, Emotional Intelligence and Personality on Investor’s Behavior and Investment Decisions.


Mainstream of the investors and investment advisory consultants both suggest and focus on standard finance models and do not take into account the neurological dimensions of finance as neurotransmitters and behavioral psychological dimensions of investors as Emotional Intelligence (EI) and Personality. When investors make investment in the stock market then these aspects of individual investors can cause of several mistakes which may lead to loss due to the unprofitable decisions, etc.

In the informed financial system and knowledge base economy, profitable investment program is not only imitative as of conventional and standard finance models or concepts but also use of neurology and behavioral psychology in finance. So, this study would be center of attention on shaping the impact of Neurotransmitters, Emotional Intelligence and Personality measures on Investor Behavior and its eventual rear-ender on investment decisions.

This study used the primary data; the data type is the cross sectional and collected with the help of questionnaire. Population of the study consists of investors in stock market of Pakistan. Sample size composed of 455 investors in the Pakistan Stock Exchanges. The data analysis performed with the help of partial least square base structural equation modeling (PL-SEM), especially hierarchical latent variable by using reflective formative types model with the help of two stage approach as guided by (Becker et al., 2012).

The empirical evidence of the study reveals that personality dimensions especially openness and consciousness as well as emotional intelligence dimensions especially self emotions appraisal and regulation of emotions have significant relation with the behavioral features of investor especially investment horizon, personalization of loss and control level. Similarly, documented that neurotransmitter’s dimension dopamine and epinephrine have significant relation with investment decisions of individual investors. In view of this, documented that emotional intelligence, neurotransmitters and personality have 13.2% impact on investor behavior and these dimensions have 4.1% impact on investment decisions of individual investor.

The empirical findings of study contribute in the theory that the fight-or-flight response theory and system of reward, theory of multiple intelligence and trait theory have superior grounds towards assessing the tendency of investor behavior and their investment decisions.

The study have wider pragmatic use for individual investors, academic researchers, consultants and investment managers of brokerage houses because it is significant for them to know the connection of behavioral and neurofinance concepts with investor behavior of individual and their investment decisions for their individual scheduling the economic decisions in the Pakistan Stock Exchange.

The empirical findings of the research open new horizon for advancement in field of neurofinance and behavioral finance. So, these avenues will provide supplemented inner view of investor’s behavior and their decision’s in the stock market of Pakistan and demand more and more effort to determine universal latent constructs for combine model of neurofinance and behavioral finance.

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