Critical Success Factors Influencing Investment Decisions of Retail Mutual Fund Investors in Ghana
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Abstract
Ghana’s investment banking industry is proliferating. Every investment bank tries to enhance overall performance and profits and increase market share. While the investment industry has experienced significant growth in assets under management over the past decade, investment banks still strive to understand better critical success factors influencing the investment decisions of retail investors in Ghana. This article overviews key behavioral finance biases prevalent within the African context. It then shares findings from a quantitative study conducted by the researcher, in which data was collected from 341 respondents across nine of Ghana’s 10 regions (at the time). The research found that the top two behavioral biases most prevalent in investor decision-making were herding and availability. Word of mouth/referrals was the most cited channel through which respondents (43.4%) had become aware of investment products they had patronized, supporting the notion that investing in one is based on trust and emotion. When dealing with money, investors will rely heavily on recommendations/referrals. The research also found that (1) the Image and reputation of the company, (2) the number of years the company has existed, (3) Competent and knowledgeable staff, (4) Past performance of returns, and (5) Time it takes to receive funds withdrawn were of most significant importance to Ghanaian investors in choosing which company to invest with. This was irrespective of age, income level, or geographic location. The article concludes with areas for future research.
Keywords
Investor Behavior, Behavioral Finance, Mutual Fund
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