Analysis of Investor Profile in Borsa Istanbul in Terms of Behavioral Finance: An Index Proposal Within the Framework of Gender and Hofstede Theories

Abstract

This study aims to dynamically evaluate the actions of investors trading stocks on Borsa İstanbul via the gender lens, utilising the masculine-feminine dimension as an extension of Hofstede's cultural dimensions theory. The study dataset includes values for the BIST-All Index, information on trading volume, and daily return and volatility series that were made from this information. Behavioural finance and gender studies have looked at things like returns, volatility, and trading volume as signs of how men spend, showing that they are more likely to take risks. Based on previous research, the VIX (Global Risk Appetite Index) and CDS (Credit Default Swap) premiums were chosen as indicators of how risk-averse female buyers are. The study analysed all variables daily and computed their common variances using the BIST-All Index using principal component analysis (PCA) to develop the Masculine-Feminine Investor Behaviour Index (EDYDE). This analysis defined the weights of the factors to be included in the index, and utilising these weights, daily EDYDE scores normalised between 0 and 1 were derived. The scores were visually represented on daily and monthly scales; to aid in the structural interpretation of the findings, three standard deviation limits were established as reference points in the graphs, with the 0.5 level designated as the threshold for masculine-feminine conduct. The data reveal that the daily EDYDE scores suggest that from 2013 to 2018, investors demonstrated more cautious, long-term, and emotional strategies, resembling the characteristics of the female investor profile. Post-2019, particularly during the COVID-19 epidemic, a notable increase in short-term, opportunistic, and risk-taking male inclinations in investor conduct has occurred. The monthly EDYDE values reveal that before 2019, investor behaviours predominantly exhibited a neutral or feminine structure; from 2020 onwards, this structure underwent a permanent transformation into a masculine nature. The year during which this change became most evident was 2021. During this period, it is posited that the systematic risk-taking propensity of investors was affected by the challenges enterprises encountered in securing foreign resources due to the crisis in the Turkish economy and the efficacy of the Currency Protected Deposit (KKM) scheme. In response to the epidemic and economic uncertainty, companies have resorted to equity financing, resulting in heightened interest in the stock market. Establishing the KKM has led to the regulated restriction of currency rates, steering investors towards equities. Investors have anticipated that the real returns from the stock market would surpass those from foreign currency; this novel pricing strategy has redefined the stock market as both an optimal financing source for companies and the most rational investment vehicle for investors. Throughout this process, investor habits characterised by a propensity for increased risk and masculine traits were pivotal in the stock market.