Investment decision-making of young retail investors: A behavioural study from China

Abstract

This study investigates the informational and behavioural determinants of young retail investors' investment decisions in China, a high-fintech penetration market with policy-driven volatility and strong collectivist traditions. Drawing on the Theory of Planned Behaviour (TPB) and Behavioural Finance Theory (BFT), this study tests the role of emotional intelligence, herd behaviour, overconfidence, accounting information, and financial knowledge. A quantitative, cross-sectional research design was employed with 504 young investors via an online platform. Multiple linear regression analysis reveals that emotional intelligence, accounting information, and financial knowledge have positive impacts on investment decisions and that herd behaviour and overconfidence have significant adverse effects. The study identifies the double-edged sword of fintech: online platforms enhance access to financial information and tools but reinforce behavioural biases through social influence and horizon problems. The findings have implications for the design of targeted financial education programmes and behaviour-based and policy reforms by organizations such as the China Securities Regulatory Commission (CSRC). The study has limitations in its urban and digitally connected sample and in its cross-sectional design. Future research should explore the role of trust in mediating the effects between informational and behavioural factors and should undertake longitudinal analyses and cross-country comparisons to extend the research on behavioural finance in developing markets.