Behavioural Finance and Investment Decision-Making During the COVID-19 Crisis: Evidence from India

Abstract

Purpose: The COVID-19 pandemic generated unparalleled unpredictability and fluctuation in financial markets, greatly impacting investment choices. This research explores how behavioural influences affect individual investors’ choices during the COVID-19 period in India, backed by secondary market-level data on investment behaviour during and post-pandemic

Design/Methodology/Approach: The research utilizes an exploratory and descriptive design. Data was gathered from individual investors using a structured questionnaire. In addition, secondary data were gathered from reports published by financial regulators, stock exchanges, and prior empirical studies to understand broader market trends. Descriptive statistical tools such as frequency analysis, percentage analysis, and mean score ranking were used to analyse the primary data.

Findings: The results suggest that investment decisions made during the COVID-19 period were strongly influenced by behavioural biases, particularly loss aversion and heightened risk perception. Secondary evidence highlights increased market volatility, panic-driven trading, and a surge in retail investor participation during and after the pandemic, reinforcing the presence of behavioural influences in investor decision-making.

Originality/Value: By integrating primary survey evidence with secondary market-level data, the study provides a comprehensive understanding of investor behaviour during an unprecedented global crisis. The research contributes to behavioural finance literature in an emerging market context and offers insights for investors, financial advisors, and policymakers.

Paper Type: Student Research Initiative