Browsing by Author "Iamin, Gustavo Carim Paiva"
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- Essays on cryptomarket individual investors' behaviorPublication . Iamin, Gustavo Carim Paiva; Vieira, Pedro Rino; Crespo, Nuno FernandesCryptocurrencies have garnered significant attention from investors, media, and scholars due to their innovative nature. Emerging from a 2008 white paper, these digital assets revolutionized finance. However, the cryptomarket is still in an early stage, remaining highly volatile and unpredictable. Despite warnings, the influx of retail investors has grown exponentially, and they seem to trade mostly based on sentiments and apparently neglecting risks, having expectations of extreme outcomes. In this context, the elements that drive individual investment decisions are still unclear, leaving the crypto market a largely unexplored domain. This thesis is dedicated to unravel the intriguing realm of cryptocurrencies, particularly investigating the nature of individual investors in this market and the behavioral factors that might be driving them to buy cryptocurrencies. The main goal is to answer the following research question: What are the key behavioral, demographic, and psychological factors shaping the personal intention to invest in cryptocurrencies, and how do they interact to influence actual behavior? The research unfolds through four interconnected studies. The first study (Chapter 2) systematically reviews the academic literature on cryptocurrencies to provide a structured and comprehensive understanding of investor attitudes. Analyzing 507 peer-reviewed articles, our work highlights the inefficiencies of the cryptocurrency market, the challenges of price prediction, and the uncertain diversification benefits associated with crypto-assets. Furthermore, it identifies a significant research gap regarding individual investor behavior in the cryptomarket, x underscoring the necessity of empirical investigations into the psychological and demographic characteristics shaping investment attitude toward cryptocurrencies. The subsequent three chapters employ survey-based research, gathering 826 responses through an online questionnaire. The first empirical study (Chapter 3) examines the role of overconfidence in distinguishing cryptocurrency investors from non-investors. Utilizing SPSS and logit regression modeling, the findings confirm that overconfidence significantly predicts investment in cryptocurrencies. While overconfidence and risk propensity are closely linked, they stem from distinct personality traits. Age and market experience correlate positively with overconfidence but negatively with risk propensity, while financial knowledge does not significantly impact investment decisions. These results indicate that psychological biases rather than financial literacy may be key drivers of investment behavior in the cryptomarket. We also examine how personality traits influence investment intentions (chapter 4). Employing Partial Least Squares Structural Equation Modeling (PLS-SEM), we find that agreeableness, conscientiousness, and neuroticism negatively affect investment intentions, while higher risk propensity increases the likelihood of investment and mediates the link between conscientiousness and attitudes toward cryptocurrencies. Additionally, this research highlights the significant role of overconfidence in shaping both investment intentions and actual behavior (chapter 5). Results confirm that behavioral intention mediates the link between personal characteristics and investment actions. Furthermore, a comparative analysis with online banking adoption suggests that familiarity with digital financial platforms may facilitate cryptocurrency engagement. xi Synthesizing insights from the systematic review and empirical studies, this thesis advances the literature on behavioral finance by integrating psychological and technological dimensions into the analysis of cryptocurrency investment. The findings contribute to theoretical frameworks on overconfidence and risk propensity, contextualizing them within the volatile and speculative nature of the cryptomarket. By examining personality traits alongside behavioral biases, this research offers a more holistic perspective on investment decision-making. From a practical standpoint, the findings have implications for policymakers, financial institutions, and investors. Regulatory bodies can leverage these insights to design investor education programs that account for psychological biases and demographic variations. Financial advisors may also incorporate personality-based insights to offer personalized investment strategies that align with client risk profile. For retail investors, this research highlights the importance of self-awareness in financial decision-making. Recognizing the influence of personal characteristics and biases can help individuals make more informed investment choices, ultimately improving risk management strategies in the cryptocurrency market. As the cryptomarket continues to evolve, understanding the behavioral underpinnings of investment intentions remains essential for fostering a more stable investment environment.