The psychology of behavioral finance and its impact on financial Soundness indicators - An analytical study for a sample of banks listed in the Iraq Stock Exchange

Abstract

       The study aims to identify the primary elements that explain patterns of investor behavior in financial markets and assess them using behavioral financial indicators, as understanding such psychological factors aids in the correct forecast of such investors' future actions. The study's problem was to evaluate the impact of financial behavior psychology knowledge on achieving financial soundness. The study employed a descriptive-analytical technique based on financial analysis tools to evaluate behavioral financial and financial soundness indicators; additionally, statistical analysis was performed to determine the extent of the impact of behavioral finance on financial soundness indicators. The study concluded several findings and recommendations, the most important of which is the close relationship between the returns of market shares and the returns achieved by the bank as a result of its banking activity, and this close relationship is due to an increase in the sale and purchase orders of the bank's shares, which encourages investors to deal with banks in the form of deposit and borrowing, then using the money by the banks to invest. Finally, it was determined that accounting returns have a longer-term link with stock returns than a shorter-term relationship.