Behavioral and Informational Determinants of Stock Market Investment Decisions Among Generation Z Investors in Nepal

Abstract

This study examines the behavioral and informational determinants of stock market investment decision behavior among Generation Z investors in Nepal. Grounded in Behavioral Finance Theory, Prospect Theory, and Social Cognitive Theory, the study investigates the influence of financial literacy, risk tolerance, herding behavior, overconfidence bias, social media influence, and financial self-efficacy on investment decisions. A quantitative cross-sectional research design was adopted, and primary data were collected from 385 Gen Z investors aged 18–27 actively participating in the Nepal Stock Exchange (NEPSE). Data were analyzed using descriptive statistics, correlation analysis, multicollinearity diagnostics, and multiple regression analysis through SPSS at a 5% significance level. The findings reveal that financial self-efficacy, financial literacy, risk tolerance, overconfidence bias, and herding behavior significantly influence investment decision behavior, while social media influence does not exhibit a statistically significant effect when other factors are controlled. The model explains a substantial proportion of variance in investment behavior, highlighting the importance of cognitive capability and psychological confidence in shaping young investors’ decisions. The study contributes to behavioral finance literature by extending generational investment research to an emerging market context and offers practical insights for policymakers, regulators, and financial institutions seeking to promote informed and sustainable youth participation in capital markets.