EFFECTS OF BEHAVIORAL FINANCE ON SOUTHEAST ASIAN STOCK MARKETS

Abstract

Behavioral finance model is based on the concept of some economic agents prone to psychological error, which explains the financial phenomena known as market anomalies endure. This paper analyzes the variable of trading volume in the Southeast Asian market based on the impact of both rational and irrational agents using linear regression model. The results are notably different from previous works in which the trading volume is both driven by rational and irrational investors, and it fails to reject the rational expectation theory.