Year: 2024
Type: article
Study design: Observational Study
Abstract: This study investigates the impact of behavioral factors—cognitive biases, emotional states, and personality traits—on financial decision-making within small and medium-sized enterprises (SMEs) in Northern Lebanon. Recognizing the central role of SME managers in shaping the financial strategies and competitive edge of their firms, the research examines how psychological factors influence decision-making in a challenging and often uncertain market environment. Drawing on behavioral finance theory, the study identifies specific cognitive biases such as overconfidence and loss aversion, which skew risk perception and lead to either excessive risktaking or an overly conservative approach. Emotional factors, including fear, enthusiasm, and stress, were found to significantly alter financial choices, with emotions often overshadowing rational decision-making. Additionally, personality traits such as extraversion, neuroticism, and conscientiousness were shown to influence managers’ willingness to take risks or prioritize stability. A quantitative methodology was employed, with data collected from 450 SME managers across diverse industries. The statistical analysis revealed strong correlations between these behavioral factors and financial outcomes, suggesting that cognitive and emotional influences play a substantial role in the financial health and competitiveness of SMEs. The study advocates for the introduction of behavioral training programs and emotional regulation techniques to help managers make more balanced, data-driven decisions. By integrating behavioral insights into financial management, SMEs can enhance their strategic decision-making processes, minimize the adverse effects of biases, and better position themselves for long-term success. The findings contribute to the growing body of research on behavioral finance in the SME context and highlight areas for future exploration, including cross-cultural studies and the impact of economic fluctuations on managerial behavior
Authors: Elena Makdissi, Riad Makdissi, Selim Mekdessi
Institution: Lebanese University
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4406151170