Cognitive Biases And Investment Decisions Of Deposit-taking Savings And Credit Cooperative Societies In Kenya

Abstract

The primary focus of this research was to examine how cognitive biases influence the investment decisions of deposit-taking savings and credit cooperatives (SACCOs) in Kenya. The study was guided by four specific objectives: first, to determine the impact of herding behavior on the investment choices of deposit-taking SACCOs in Kenya; second, to evaluate whether mental accounting affects the investment decisions of these SACCOs; third, to investigate the role of overconfidence in shaping the investment choices of credit cooperatives involved in deposit-taking and savings; and finally, to assess how regret aversion influences the investment decisions made by investors in these SACCOs. Primary data was collected using a Likert scale-based, self administered questionnaire, and the analysis was conducted using multiple regression and correlation analysis. The study also adopted a descriptive survey approach, utilizing a census technique to gather data from the 176 registered and licensed deposit-taking SACCOs in Kenya. The target population for the study consisted of SACCOs actively engaged in deposit-taking and savings activities. The research employed both open and closed-ended questions in the questionnaire as the main data collection tool. Other statistical methods used included measures of central tendency, dispersion, and correlation analysis, all facilitated by SPSS software. To ensure the validity of the research instrument, tests for multicollinearity, linearity, autocorrelation, and heteroskedasticity were conducted. From the analysis various findings were drawn also several recommendations were uplifted which included first the investor to re-evaluate the decision in regards to investment the deposit taking saccos, secondly deposit taking to continuously integrate technology and thirdly government policy making and regulating body ensure that prospective investors resources are safeguarded. Finally, areas for further research was included as the last part in the research