Integration of Behavioral Finance and Local Culture in Investment Decisions
DOI:
https://doi.org/10.22225/jj.13.1.2026.54-65Keywords:
behavioral finance, expected return, investment decision, local culture, risk perception, SLRAbstract
The objective of this study is to conduct a systematic literature review of the development of studies related to behavioral finance and its influence on investment decision making. The study will pay particular attention to the role of local culture as a moderating factor. The present study employed the Systematic Literature Review (SLR) approach to conduct a comprehensive review of 50 scientific articles published from 2000 to 2025. The analysis indicates that behavioral biases, including overconfidence, loss aversion, and herding behavior, in addition to risk perception and return expectation, are variables that have been consistently identified as having a significant influence on investment decisions. However, there are still significant gaps in the extant literature, especially regarding the integration of local culture in financial decision-making models. In the Indonesian context, cultural values such as Catur Purusa Artha are believed to play a significant role in shaping investment attitudes and preferences. However, these cultural values have not yet been empirically studied. Consequently, this study offers a conceptual framework that integrates extant research and proposes a novel approach to the study of behavioral finance, one that is more culturally pertinent. The findings are expected to serve as a theoretical and practical foundation in encouraging local wisdom-based investment research and policy in Indonesia.
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