Exploring Home Bias among Finnish Retail Investors: Behavioural and Demographic Insights
Jäälinoja, Jaakko (2025)
2025
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2025052716509
https://urn.fi/URN:NBN:fi:amk-2025052716509
Tiivistelmä
This thesis explored the persistence of home bias among Finnish retail investors, with a particular focus on behavioural and demographic factors. Although investment theory emphasizes the benefits of international diversification, many Finnish investors continue to concentrate their port-folios in domestic equities. The study examined why this pattern persists, especially when global investing has become easier through digital platforms.
The research combined modern portfolio theory with concepts from behavioural finance, such as familiarity bias, loss aversion, overconfidence, and financial literacy. The survey, which was distributed in late 2024, was based on these theoretical insights and aimed to capture behavioural patterns across different investor groups. The survey received 30 responses from individual Finnish investors who manage their own portfolios. Data was analysed using descriptive statistics and cross-tabulation to identify behavioural tendencies and demographic differences. Although the sample size was small, the patterns observed were consistent with prior studies and offered valuable preliminary insight.
The findings confirmed that home bias remains common, especially among older, retired, or less educated investors. Respondents frequently cited familiarity with domestic companies and better access to information as reasons for favouring Finnish stocks. While most acknowledged the benefits of diversification and expressed openness to investing abroad, practical concerns like taxation complexity and lack of information still discouraged them. The results suggest that home bias is less a deliberate strategy and more a result of habits, limited knowledge, and subtle psychological preferences.
The research combined modern portfolio theory with concepts from behavioural finance, such as familiarity bias, loss aversion, overconfidence, and financial literacy. The survey, which was distributed in late 2024, was based on these theoretical insights and aimed to capture behavioural patterns across different investor groups. The survey received 30 responses from individual Finnish investors who manage their own portfolios. Data was analysed using descriptive statistics and cross-tabulation to identify behavioural tendencies and demographic differences. Although the sample size was small, the patterns observed were consistent with prior studies and offered valuable preliminary insight.
The findings confirmed that home bias remains common, especially among older, retired, or less educated investors. Respondents frequently cited familiarity with domestic companies and better access to information as reasons for favouring Finnish stocks. While most acknowledged the benefits of diversification and expressed openness to investing abroad, practical concerns like taxation complexity and lack of information still discouraged them. The results suggest that home bias is less a deliberate strategy and more a result of habits, limited knowledge, and subtle psychological preferences.