FINANCIAL DECISION-MAKING AS A LEADERSHIP SKILL: LESSONS FROM BEHAVIORAL FINANCE

Abstract

Leadership effectiveness in contemporary organizations is increasingly defined by the ability to integrate financial judgment with behavioural insights. While traditional finance assumes rational decision-making, real-world leadership demonstrates vulnerability to cognitive biases such as overconfidence, loss aversion, herd mentality, and framing effects. Behavioural finance provides a corrective framework, equipping leaders to recognize, manage, and mitigate these biases, thereby improving decision-making under uncertainty. Case studies from corporate, industrial, and educational contexts highlight how biases distort financial choices and illustrate the necessity of embedding behavioural principles within leadership practice. Furthermore, leadership education must systematically incorporate behavioural finance through case-based learning, simulations, reflective practice, and emotional intelligence training. By aligning financial acumen with psychological awareness, leaders cultivate resilience, ethical judgment, and organizational trust in volatile environments.