THE IMPACT OF PSYCHOLOGICAL BIASES ON FOREIGN DIRECT INVESTMENT (FDI): THE CASE OF TURKISH INVESTORS IN ETHIOPIA

Year 2018, , 115 - 132, 28.12.2018

Abdu Seid Ali , Jale S.oran

https://doi.org/10.23892/JRB.2019.25

Cited By: 1

Abstract

This paper
aims to assess whether there is a behavioral bias of Turkish FDI investors in
Ethiopia. Besides, it addresses the influence of firm size, investment
duration, target customers and amount of investment on the behavioral
variables. In order to do so, a survey was conducted on a sample of Turkish FDI
investors in Ethiopia which tries to examine their cognitive psychological
factors towards their investment decisions. The survey result was analyzed
using factor analysis. The statistical findings confirm that some psychological
anomalies such as representativeness, herding, regret aversion and mental
accounting have been observed on Turkish FDI investors. The regression analysis
shows that amount of investment of the firms significantly and positively
affects herding, representativeness, regret aversion and mental accounting
behaviors. Furthermore,
duration of investment in Ethiopia affects their representativeness and mental
accounting behavioral biases of investors positively.

Keywords

FDI, Behavioral bias, Turkish investors, Ethiopia

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