Author(s)

Haokai Zhao ¹

Affiliation(s)

¹ University of Nottingham Ningbo China, Ningbo, 315000, China

Corresponding Author

Haokai Zhao

ABSTRACT

The purpose of this paper is to explore in depth the impact of retail investors' mindset and behavior on their investment returns in the Chinese A-share market. This study analyzes the direct and indirect effects of investor mindset (including confidence level, risk appetite, emotional control, etc.) and investment behaviors (e.g., trading frequency, asset selection and timing) on investment returns. It is found that retail investors generally have cognitive biases and irrational behaviors, and these psychological and behavioral factors significantly affect their investment decisions and ultimate returns. On this basis, based on the results of the study, this paper proposes investment strategy recommendations for retail investors, as well as policy recommendations for investor protection mechanisms that can improve the current situation of the A-share market. This study not only provides a new perspective for understanding retail investors in China's A-share market, but also provides an empirical basis and policy reference for financial market regulators and policy makers.

KEYWORDS

Investor mindset, investment returns, herd effect

CITE THIS PAPER

Haokai Zhao, The Impact of Retail Investor Mindset and Investor Behavior on Investment Returns in China A-Share Market. Financial Engineering and Risk Management (2024) Vol. 7: 89-98. DOI: http://dx.doi.org/10.23977/ferm.2024.070213.

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