World Journal of Social Sciences Vol. 2. No. 4. July 2012. Pp. 15 – 33 ____________________________________________ 1 Lecturer, Faculty of Business and Economics, Daffodil International University, Dhaka, Bangladesh. Tel:+8801610001157; E-mail: wahida@daffodilvarsity.edu.bd; wahidafa@hotmail.com 2 Assistant Professor, Faculty of Business and Economics, Daffodil International University, Dhaka, Bangladesh. E-mail: mir_bd@hotmail.com (Corresponding Author) 3 Senior Lecturer, Faculty of Management, Multimedia University, Cyberjaya 63100, Selangor, Malaysia. E-mail: mohammad@mmu.edu.my; huda.mazumder@gmail.com Behavioral Financing: Demographic Factors and Services of Brokerage Houses in Bangladesh Wahida Farzana 1 , Masud Ibn Rahman 2 and Mohammad Nurul Huda Mazumder 3 This paper investigated two vital areas of behavioral finance; investors’ awareness about capital market and the services rendered by the brokerage houses by employing a structured questionnaire based on a survey between periods of August 2010- September 2010 on 76 individual investors. The results reveal that investors are conscious nowadays and have positive attitude towards capital market. The investors are investing after carefully investigating all market related issues. Another aspect of this study reveals that there is a significant gap between expected and actual service of brokerage houses. Reasons like high commission rate, non-cooperative attitude of brokers, high account maintenance fee etc created such differences. After analyzing survey results, education and occupation of the investors are found to be significant factors for investment, preference and consideration of buying shares whereas no effect of age and gender are found. According to findings of the study, investors are suggested to be responsible toward both capital market situation and be conscious of brokerage house services. There are lacks of studies concerning individual investors’ behavior in Bangladesh, this paper will help fill this loophole and expect to enhance knowledge in this field. Keywords: Behavioral Finance, Demographic factors, Services, Investment factors. Field of Study: Behavioral Finance 1. Introduction In Bangladesh, responses of investors to capital market are overwhelming. The Bangladeshi economy has opened up doors through many development programs in the capital market as well as money market with the help of financial system and financial institutions or intermediaries which foster savings and channel them to their most efficient use. For example, after initiating some policies such as trading system automation known as central depository system, reducing bank interest rate and involving merchant banks’ in capital market as well as new issues being floated by the private and public sectors, many investors were able to make significant profits between 2007 and the middle of 2009 from the capital market [Source: DSE website]. As a result, investors in Bangladesh invest their money with high expected return from the securities. At the same time investors are very price sensitive. This “expected” return is directly related with the “perception” of price and actual “performance” of a particular security. This expectation-perception-performance relationship eventually reflects in investors’ satisfaction and dissatisfaction. Also, they are influenced by issues like availability of information.