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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM66673
Volume:
10 |
8 |
Aug 2026
Pages:
1-5
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Department of MBA & Research Centre
Surana College (Autonomous)
Traditional finance assumes rational investors, yet real-world bubbles, crashes, and irregular trading patterns show that psychological forces meaningfully shape investment outcomes. This study examines how behavioural biases (herding, loss aversion, overconfidence) and psychological traits (confidence, emotional stability, self-discipline, risk-taking ability) influence retail investment performance. A descriptive, quantitative design was used, with primary data from 153 retail investors in India collected via a structured questionnaire (purposive sampling; Cronbach's Alpha = 0.874). Multiple Regression Analysis tested the effect of behavioural biases on performance; Pearson Correlation Analysis tested the relationship between psychological traits and performance. Behavioural biases jointly explained 38.44% of the variance in investment performance (R² = 0.3844, F = 31.02, p < 0.001), with herding (β = 0.163, p = 0.010), loss aversion (β = 0.189, p = 0.013), and overconfidence (β = 0.199, p = 0.003) each significant. Psychological traits showed a significant, moderate positive correlation with performance (r = 0.342, p < 0.001). Both dimensions emerged as significant, independent determinants of performance, extending behavioural finance theory, prospect theory, and the theory of planned behaviour into the Indian retail context, with practical implications for investors, advisors, and policymakers.
KEYWORDS
This study examined how behavioural biases and psychological traits influence retail investment performance using data from 153 Indian investors. Behavioural biases -herding, loss aversion, and overconfidence -significantly impact performance, jointly explaining 38.44% of its variance, while psychological traits -confidence, emotional stability, self-discipline, and risk-taking ability -show a significant, moderate positive relationship with performance. These results confirm that retail investment performance is shaped not only by financial knowledge but by how investors think, feel, and behave under uncertainty. Both dimensions emerge as significant, independent contributors to investment success, reinforcing behavioural finance's central premise: improving outcomes requires managing behavioural tendencies alongside cultivating the psychological qualities that support rational, disciplined investing.
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Publication Date
8/11/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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The authors declare no conflict of interest related to this research work.
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