HERDING BEHAVIOUR AND INDIVIDUAL INVESTOR DECISION-MAKING AT THE NAIROBI SECURITIES EXCHANGE


Samson Kiprotich Bett, Dr. Penina Langat, Dr. Gichuki Kingori
School of Business and Economics, University of Kabianga, P. O. Box 2030-20200, Kericho, Kenya
Abstract
This paper examined the relationship between herding behaviour and individual investor decision-making at the Nairobi Securities Exchange. The study was anchored on behavioural finance theory and was guided by a correlational research design. The study's target population was 2.03 million individual investors who traded at the Nairobi Securities Exchange through the 17 licensed brokerage firms in Kenya. A structured questionnaire was used to collect data and Internal consistency of the instruments was measured using Cronbach’s alpha coefficient, where a coefficient of 0.865 was obtained. The obtained data was analyzed descriptively using frequencies, means, and standard deviation and inferentially by correlation and multiple regression models. The findings revealed that herding behaviour (r = 0.235; β =0.180 p<0.05) had a positive and significant relationship with individual investor decision-making. The study concluded that herding behaviour had a significant relationship with individual investor decision-making at the Nairobi Securities Exchange. The study recommended that investors understand market trends, financial statements, and economic indicators and continue seeking advice from financial experts. NSE should also provide regular market analysis, ensure transparency in market operations to build investor confidence and introduce investment products that cater to different risk profiles, such as low-risk mutual funds. The findings of the study could be of significance to policymakers, financial experts, academicians, scholars, and theoretical developments.
Keywords: Herding Behaviour, Individual Investor Decision Making, Nairobi Securities Exchange
Journal Name :
EPRA International Journal of Economics, Business and Management Studies (EBMS)

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Published on : 2024-08-28

Vol : 11
Issue : 8
Month : August
Year : 2024
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