The Influence of Neural Behavior on Individuals’ Financial Decisions

To cope with the complexity of modern life, the need for better financial education is more crucial than ever. To make a good financial decision, a person needs to equip himself or herself with the knowledge and skills necessary to make an informed financial decision, manage debt effectively, plan for the future, and navigate a complex economic landscape. To exercise these complex economic decisions, the brain plays an important role in integrating information, assessing risk and reward, managing emotions, and executing strategies to achieve financial goals. As a result, an emerging field in the area of behavioral finance has emerged, which acts as a multidisciplinary field of study known as neurofinance. Neurofinance is a combination of fields of study like neurology, psychology, and finance and is an important tool for understanding an individual’s behavior towards financial activity done through brain mapping. Thus, this paper constructs the concept of neurofinance in the life of an individual financial decision-maker. The present study demonstrates the available studies constructed by different researchers, authors, and organizations. After reviewing the existing literature, the researcher found a major gap in that there was not a single study conducted to determine the influence of neural behavior on financial decision-making among the private and government sector employees of a selected region. Therefore, it is imperative to know whether there is any association between neurofinance and the individual financial decision-making of the people in North-East India. Accordingly, it is anticipated that this review paper will facilitate forthcoming empirical research to examine individual financial decision-making in detail.