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Behavioural Finance Perspectives On Esg Investment Decision-Making

Author : Journa Name: International Journal for Novel Research in Economics, Finance and Management Volume: 4 issue: 2 Year: Volume-4-issue-2 Views : 79
Abstract:
This study examines the behavioural finance dimensions of Environmental, Social, and Governance (ESG) investment decision-making among individual investors. Drawing on a structured survey of 106 respondents analysed using multiple regression, chi-square tests, ANOVA, and correlation analysis in R 4.2.0, the research investigates how cognitive biases, emotional influences, risk perceptions, and personal value systems shape ESG portfolio allocation decisions. Key findings reveal that value alignment (? = 0.452, p < 0.001) and emotional influence (? = 0.325, p < 0.001) are the strongest behavioural predictors of ESG commitment, jointly explaining 58.47% of variance in portfolio allocation. Risk perception significantly moderates ESG adoption (?² = 42.376, p = 0.0003), with novice investors perceiving substantially higher risk than experienced peers. Personal values and ethical motivations emerge as the most consistent drivers: investors with strong value alignment are 3.48 times more likely to hold high ESG allocations (OR = 3.48, p < 0.001). These findings challenge purely rational models of investor behaviour and provide actionable insights for asset managers, financial advisors, and policymakers seeking to expand sustainable finance participation.\n\n

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