Beyond Traditional Biases: An Exploratory Empirical Study of Emerging Emotional and Situational Drivers of Investment Behaviour among Gen Z Investors in Bhopal, India

The present study was aimed at exploring the effect of Financial Growth Engagement Factor (FGEF) and Socially Driven Impulsive Investment (SDII) on Investment Decision Behaviour (IDB) of Gen Z investors through EFA, CFA and PLS-SEM methodologies. The empirical results showed that the measurement model showed sufficient internal consistency, convergent validity, and discriminant validity. The factor analytical results proved to be able to determine three significant factors with good factor loadings and cumulative variance.   Furthermore, the results of the analysis of the model showed that Financial Growth Engagement Factor (FGEF) and Socially Driven Impulsive Investment (SDII) had both a positive and significant effect on Investment Decision Behaviour of Gen Z investors. The two predictors showed a relatively stronger effect on investment decision behaviour, with FGEF showing a stronger effect, suggesting that investors who are financially growth-oriented and actively engaged in investing are more likely to play an effective role in investment activities. The effect of SDII was comparatively small but statistically significant, indicating that social influence, peer behaviour and impulsive tendencies also play a part in the investment decision-making process of Gen Z investors. The model also exhibited good explanatory and predictive capability with R², Q² predict, RMSE and MAE values, indicating that the proposed framework is suitable and has good prediction power in behavioural finance research. In conclusion, the results provide further evidence to the body of research on emerging behavioural and emotional factors influencing investment behaviour, specifically for Gen Z investors. This research builds on the already rich body of Behavioural Finance literature and extends the scope of knowledge of investment behaviour beyond the scope of traditional behavioural biases. The study identifies new emotional and situational variables that are now impacting the investment choices of Gen Z investors. The study also adds to the scarce literature available on the Indian context, especially young investors in Tier-II cities, such as Bhopal. From a methodological perspective, the application of EFA, CFA and PLS-SEM offers a holistic approach to study the modern constructs of behaviour in the investment decision-making process and can be used as a guideline for further research in behavioural finance.

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