Analysis of factors affecting investors’ decision towards cryptocurrency investments in Saudia Arabia: A moderating role of fear of missing out (FOMO) on decision-making

Asif Hasan, Shahid Alam, Sufyan Habib, Mohammed Arshad Khan

Article ID: 6419
Vol 8, Issue 9, 2024

VIEWS - 250 (Abstract) 104 (PDF)

Abstract


This research aims to investigate the factors shaping the investment choices of individuals in Saudi Arabia concerning cryptocurrencies, particularly focusing on the influence of the Fear of Missing Out (FOMO) psychological phenomenon. This study employs a mixed-methods approach to comprehend the factors influencing Saudi investors' decisions in the cryptocurrency realm. Quantitative surveys are conducted to gauge perceptions of risk, return, regulatory factors, and social influence. Additionally, qualitative interviews delve into the nuanced interplay of these elements and the impact of FOMO on decision-making. Integrating the Theory of Planned Behavior and Behavioral Finance theories, this research offers a holistic understanding of cryptocurrency investment determinants. The combined quantitative and qualitative methods provide a comprehensive view, enabling an in-depth analysis of the subject matter. The study reveals that Saudi Arabian investors' decisions regarding cryptocurrencies are significantly influenced by multiple factors, including perceived risk, potential return, regulatory environment, and social dynamics. FOMO emerges as a crucial psychological factor, interacting with these influences and driving decision-making. This research underscores the intricate interplay between these factors and FOMO, shedding light on the dynamics of cryptocurrency investment choices in the Saudi Arabian market. The findings hold implications for policymakers, financial institutions, and investors seeking deeper insights into this evolving landscape. Drawing from the Theory of Planned Behavior and Behavioral Finance, it examines perceived risk, return, regulatory factors, and social influence in influencing cryptocurrency investment choices among Saudi investors, focusing on the influence of Fear of Missing Out (FOMO).  The research outcome provides insights for policymakers, financial institutions, and investors seeking to understand cryptocurrency investment dynamics in Saudi Arabia.


Keywords


cryptocurrency; blockchain; investment intention; investment behaviour, decision-making process

Full Text:

PDF


References


Abu Dhabi, S., Al-Riyami, M., & Al-Nasr, A. (2021). Social media and fear of missing out: Implications for cryptocurrency investment behavior. Journal of Digital Marketing, 39(4), 556–571.

AlAbbas, M. K. (2021). Blockchain Technology and Financial Inclusion in Saudi Arabia. Journal of Financial Innovation and Technology, 12(4), 315–329.

Alhussain, M. (2020). Factors Affecting Investment Decision in the Saudi Stock Market. International Journal of Business Administration, 11(3), 107. https://doi.org/10.5430/ijba.v11n3p107

Al-Twaijry, A. M., & Al-Ghamdi, F. S. (2021). Cryptocurrency Investment Trends in Saudi Arabia: A Preliminary Study. Journal of Emerging Technologies in Finance, 8(2), 112–130.

Ali, M. A., Alam, W., Haque, S., & Akhtar, A. (2023). Impact And Significance of CRM in Rural Banking—A Comprehensive Study. AMA, Agricultural Mechanization in Asia, Africa and Latin America.

Amin, H., Suhartanto, D., Ghazali, M. F., et al. (2023). Factors influencing internet giving behaviour and altruism among young graduates in Malaysia. Asian Academy of Management Journal, 28(1), 213–235. https://doi.org/10.21315/aamj2023.28.1.9

Baur, D. G., Hong, K., & Lee, A. D. (2018). Bitcoin: Medium of exchange or speculative assets? Journal of International Financial Markets, Institutions and Money, 54, 177–189. https://doi.org/10.1016/j.intfin.2017.12.004

Binance Research. (2019). Understanding Crypto Investors. Binance Research Publication.

Blocki, J., Zhou, H. S. (2016). Designing proof of human-work puzzles for cryptocurrency and beyond. In: Hirt, M., Smith, A. (editors). Theory of Cryptography Conference. Springer. pp.517–546.

Bouri, E., Molnár, P., Azzi, G., et al. (2019). On the hedge and safe haven properties of Bitcoin: Is it really more than a diversifier? Finance Research Letters, 29, 266–276.

Bouri, E., Gupta, R., Kyei, C., & Roubaud, D. (2020). Bitcoin Price and Financial Stress: Evidence from the 2017 Bubble Period. Finance Research Letters, 101650.

Bouri, E., Molnár, P., Azzi, G., et al. (2017). On the hedge and safe haven properties of Bitcoin: Is it really more than a diversifier? Finance Research Letters, 20, 192–198. https://doi.org/10.1016/j.frl.2016.09.025

Brown, D. K., & Harlow, S. (2019). Protests, media coverage, and a hierarchy of social struggle. The International Journal of Press/Politics, 24(4), 508-530.

Chang, T., Zhang, H., & Wang, W. (2020). Herding Among FOMO-Driven Investors: Evidence from the Bitcoin Bubble. Journal of Behavioral and Experimental Finance, 27, 100394.

Cheah, E. T., & Fry, J. (2015). Speculative bubbles in Bitcoin markets? An empirical investigation into the fundamental value of Bitcoin. Economics Letters, 130, 32–36. https://doi.org/10.1016/j.econlet.2015.02.029

Chen, X., Zhang, X., & Wei, X. (2021). Does trust in cryptocurrencies matter? The impact of institutional trust on cryptocurrency investment intention. International Journal of Information Management, 58, 102327.

Chu, J., Chan, S. H., Nadarajah, S., & Osterrieder, J. (2019). GARCH modeling of cryptocurrency volatility. Journal of Risk and Financial Management, 12(2), 69.

Demir, E., Gozgor, G., & Lau, C. K. (2021). The conditional relationship between cryptocurrency returns and risk factors: Evidence from the cross-section of Bitcoin returns. Research in International Business and Finance, 55, 101356.

Di Fabio, A., & Gori, A. (2019). FOMO and Investment Behaviors: The Role of Financial Anxiety, Risk Tolerance, and Social Media. Frontiers in Psychology, 10, 1126.

Elhai, J. D., Levine, J. C., Dvorak, R. D., et al. (2016). Fear of missing out, need for touch, anxiety and depression are related to problematic smartphone use. Computers in Human Behavior, 63, 509–516. https://doi.org/10.1016/j.chb.2016.05.079

Frieder, L. (2018). Information Overload, Herding, and Volatility. Journal of Financial Economics, 130(3), 503–531.

Garcia, D., & Schweitzer, F. (2018). Social signals and algorithmic trading of Bitcoin. Royal Society Open Science, 5(2), 171371.

Hawlitschek, F., Notheisen, B., & Teubner, T. (2020). A 2020 perspective on “The limits of trust-free systems: A literature review on blockchain technology and trust in the sharing economy.” Electronic Commerce Research and Applications, 40, 100935. https://doi.org/10.1016/j.elerap.2020.100935

Hsieh, Y. C., & Tsai, C. F. (2020). Antecedents of blockchain technology investment intention: A UTAUT perspective. Journal of Business Research, 118, 443–453.

Hasan, A., Habib, S., Khan, M. A., et al. (2023). Student Adoption of E-Learning in Higher Education Institutions in Saudi Arabia. International Journal of Information and Communication Technology Education, 19(1), 1–21. https://doi.org/10.4018/ijicte.322792

Johnson, A., & Smith, B. (2019). Perceived Trust and Investor Intention in Cryptocurrency Investment. Journal of Finance and Digital Currency, 5(2), 45–62.

Johnson, P., & Smith, R. (2019). Psychological Biases and Cryptocurrency Investments. Journal of Behavioral Economics, 28(3), 321–337.

Kajtazi, A., & Maqrollari, L. (2020). Fear of Missing Out (FOMO) and Its Impact on Cryptocurrency Investment. International Journal of Economics, Commerce, and Management, 8(5), 123–135.

Kala, D., & Chaubey, D. S. (2023). Cryptocurrency adoption and continuance intention among Indians: moderating role of perceived government control. Digital Policy, Regulation and Governance, 25(3), 288–304. https://doi.org/10.1108/dprg-09-2022-0108

Kostovetsky, L., & Benedetti, H. (2019). Digital Tulips? Returns to Investors in Initial Coin Offerings. Journal of Corporate Finance, 101578.

Kristoufek, L. (2015). What Are the Main Drivers of the Bitcoin Price? Evidence from Wavelet Coherence Analysis. PLOS ONE, 10(4), e0123923. https://doi.org/10.1371/journal.pone.0123923

Khan, M. A., & Alhumoudi, H. A. (2022). Performance of E-Banking and the Mediating Effect of Customer Satisfaction: A Structural Equation Model Approach. Sustainability, 14(12), 7224. https://doi.org/10.3390/SU14127224

Khan, M. A. (2021). Netizens’ Perspective towards Electronic Money and Its Essence in the Virtual Economy: An Empirical Analysis with Special Reference to Delhi-NCR, India. Complexity, (1). https://doi.org/10.1155/2021/7772929

Khan, M. A., Alhathal, F., Alam, S., et al. (2023). Importance of Social Networking Sites and Determining Its Impact on Brand Image and Online Shopping: An Empirical Study. Sustainability, 15(6), 5129. https://doi.org/10.3390/su15065129

Khan, M. A., & Minhaj, S. M. (2021). Performance of online banking and direct effect of service quality on consumer retention and credibility of consumer and mediation effect of consumer satisfaction. International Journal of Business Information Systems, 1(1), 1. https://doi.org/10.1504/ijbis.2021.10043829

Khan, M. A., & Minhaj, S. M. (2022). Dimensions of E-Banking and the mediating role of customer satisfaction: a structural equation model approach. International Journal of Business Innovation and Research, 1(1), 1. https://doi.org/10.1504/ijbir.2022.10045447

KuCoin Exchange. (2022). Saudi Arabia Crypto Market Survey. Available online: https://www.kucoin.com/blog/kucoin-into-the-cryptoverse-reveals-increase-in-number-of-saudi-arabian-crypto-investors-adopting-auto-trading-strategies-in-bearish-market (accessed on 21 July 2023).

Lee, C., Wang, H., & Kim, J. (2020). The Role of Government Regulation on Perceived Trust in Cryptocurrency Markets. Journal of Economics and Regulation, 12(4), 301–317.

Lee, J., & Lee, B. (2018). Perceived Usefulness of Cryptocurrencies in Business Transactions. Journal of Business and Finance, 12(4), 11–26.

Li, L., Niu, Z., Mei, S., & Griffiths, M. D. (2022). A network analysis approach to the relationship between fear of missing out (FoMO), smartphone addiction, and social networking site use among a sample of Chinese university students. Computers in Human Behavior, 128, 107086.

Li, X., Wang, C., & Huang, X. (2021). Determinants of individual cryptocurrency adoption: A case of China. International Journal of Finance & Economics, 26(1), 889–900.

Li, Y., Xu, X., Wang, C., & Zhang, Y. (2019). Individual investors’ adoption intention of mobile financial products: An empirical study from the perspectives of trust and facilitating conditions. Sustainability, 11(22), 6238.

Mashwani, A., Song, H., & Raza, M. A. (2019). Determinants of individual investor behavior: A study of the Karachi stock exchange. International Journal of Finance & Economics, 24(1), 58–80.

Moskowitz, T. J., Ooi, Y. H., & Pedersen, L. H. (2019). Time series momentum. Journal of Financial Economics, 104(2), 228–250. https://doi.org/10.1016/j.jfineco.2011.11.003

Minhaj, S. M., Rehman, A., Das, A. K., et al. (2024). Investor Sentiment and The Function of Blockchain Technology in Relation to Digital Currencies: The Here and Now and The Future. Educational Administration: Theory and Practice. https://doi.org/10.53555/kuey.v30i5.3942

Mutahar, A. M., Daud, N. M., Ramayah, T., et al. (2018). The effect of awareness and perceived risk on the technology acceptance model (TAM): mobile banking in Yemen. International Journal of Services and Standards, 12(2), 180. https://doi.org/10.1504/ijss.2018.091840

Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. Available online: https://bitcoin.org/bitcoin.pdf (accessed on 2 June 2023).

Przybylski, A. K., Murayama, K., DeHaan, C. R., et al. (2013). Motivational, emotional, and behavioral correlates of fear of missing out. Computers in Human Behavior, 29(4), 1841–1848. https://doi.org/10.1016/j.chb.2013.02.014

Sadiq, R., Hasan, A., Ali, A., & Javaid, U. (2021). The Impact of Government Regulation on Cryptocurrency Adoption in Developed and Developing Economies. Sustainability, 13(8), 4213.

Sekhon, M. S., Kaur, P., & Kaur, P. (2020). Exploring factors influencing individual cryptocurrency investment: A systematic literature review. Technological Forecasting and Social Change, 158, 120145.

Singh, D., & Kapoor, R. (2020). Regulatory Environment and Cryptocurrency Investments: A Case Study of Saudi Arabia. International Journal of Economics and Regulation, 20(1), 45–61.

Smith, A., & Jones, B. (2018). Volatility and Risk Perception in Cryptocurrency Investments. Journal of Finance and Economics, 45(3), 213–230.

Smith, T., Johnson, R., & Anderson, L. (2017). Understanding the Investment Intention and Perceived Usefulness of Cryptocurrencies. Journal of Finance and Investment, 8(2), 46–58.

Sukumaran, S., Bee, T. S., & Wasiuzzaman, S. (2022). Cryptocurrency as an Investment: The Malaysian Context. Risks, 10(4), 86. https://doi.org/10.3390/risks10040086

Tan, L., Chan, K., & Ng, R. (2021). The Impact of Exchange Reputation on Perceived Trust and Investor Intention in Cryptocurrency Investment. International Journal of Blockchain Studies, 8(3), 156–171.

Turel, O., Cavagnaro, D. R., & Merchant, A. (2019). Media, peers, and markets: The role of social factors in cryptocurrency trading. International Journal of Information Management, 49, 426–436.

Venkatesh, V., Morris, M. G., Davis, G. B., & Davis, F. D. (2003). User acceptance of information technology: Toward a unified view. MIS Quarterly, 425–478.

Verduyn, P., Lee, D. S., Park, J., et al. (2015). Passive Facebook usage undermines affective well-being: Experimental and longitudinal evidence. Journal of Experimental Psychology: General, 144(2), 480–488. https://doi.org/10.1037/xge0000057

Yermack, D. (2017). Corporate Governance and Blockchains. Review of Finance, 21(1), 7–31. https://doi.org/10.1093/rof/rfw074

Yi, J., & Wang, Y. (2019). The Influence of Fear of Missing Out (FOMO) on Investor Behaviors in the Cryptocurrency Market. Journal of Behavioral and Experimental Finance, 23, 34–44.

Yli-Huumo, J., Ko, D., Choi, S., et al. (2016). Where Is Current Research on Blockchain Technology?—A Systematic Review. PLOS ONE, 11(10), e0163477. https://doi.org/10.1371/journal.pone.0163477

Zhang, Y., Wen, L., & Lyu, P. (2018). Forecasting cryptocurrency prices with investor sentiment. IEEE Transactions on Computational Social Systems, 6(6), 1313–1323.

Zhong, H., Xu, Y., & Zhang, M. (2022). The influence of social media on individual investor behavior. Pacific-Basin Finance Journal, 73, 101932.




DOI: https://doi.org/10.24294/jipd.v8i9.6419

Refbacks

  • There are currently no refbacks.


Copyright (c) 2024 Asif Hasan, Shahid Alam, Sufyan Habib, Mohammed Arshad Khan

License URL: https://creativecommons.org/licenses/by/4.0/

This site is licensed under a Creative Commons Attribution 4.0 International License.