Behavioural Biases and Investment Decisions during COVID-19: An Empirical Study of Chinese Investors

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Ivy S.H. Hii
Xu Li
Haifeng Zhu


Due the outbreak of the COVID-19 pandemic, China’s economy and securities market were significantly impacted, prompting the need to understand investor behaviour during this emergency. This study investigates the investment behaviour of Chinese investors during the COVID-19 pandemic, focusing on four types of investor biases: representativeness, overconfidence, disposition effect, and herding effect. The study utilized a quantitative research design, collecting data through an online questionnaire and a convenience sampling method from investors who traded in the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Multiple linear regression analysis was employed to examine the impact of behavioural biases on investment decisions during the pandemic. Results showed that representativeness, disposition effect and herding effect significantly influenced investors’ investment decisions. This study contributes to the literature on behavioural finance by providing empirical evidence of the impact of behavioural biases on Chinese investors’ investment decisions during a crisis. The findings have practical implications for financial institutions to better understand the behaviour of Chinese investors during times of crisis and suggest the need for financial institutions to incorporate behavioural finance principles in their risk management practices.


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