Understanding Behavioural Finance: Investor Psychology and Market Anomalies

T. Venkatesan; V. Viswaprakash; R. Alexzander

doi:10.56741/IISTR.jmsd.001998

Authors

T. Venkatesan
proftvv@gmail.com
Knowledge Institute of Technology https://orcid.org/0000-0002-7716-8907
V. Viswaprakash Valliammai Engineering College
R. Alexzander Silicon City College (Autonomous) https://orcid.org/0000-0003-3448-3728

DOI:

https://doi.org/10.56741/IISTR.jmsd.001998

Keywords:

Behavioral Finance, Cognitive Biases, Financial Decision-Making, Investor Psychology, Market Anomalies

Abstract

This study explores the evolving field of behavioral finance, focusing on how psychological factors influence investor decision-making and contribute to persistent market anomalies. Unlike traditional financial theories that assume rational behavior and efficient markets, behavioral finance integrates cognitive biases, emotional influences, and social dynamics to explain deviations from expected market outcomes. The research examines key behavioral concepts such as overconfidence, loss aversion, herding, and framing effects, and their implications for asset pricing, risk perception, and investor behavior. Drawing upon recent empirical and theoretical work from both global and Indian contexts (2020–2025), the study highlights how these psychological elements lead to mispricing and volatility in financial markets. The findings suggest that incorporating behavioral insights can improve investment strategies, regulatory frameworks, and financial literacy programs. By advancing a multidisciplinary approach, this paper contributes to a deeper understanding of real-world financial behavior and calls for more adaptive and inclusive financial systems.

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Author Biographies

T. Venkatesan, Knowledge Institute of Technology

is Vice Principal in the Department of Management Studies. He obtained his M.A. (Public Administration), M.Com, M.Phil, and MBA from Annamalai University and a Ph.D. degree in Management Studies, specializing in Finance from Bharathiar University, Tamil Nadu. He has published more than 40 articles in national and international journals. He has organized four international conferences. His areas of interest are Finance and Management Accounting. He has taught a diverse set of subjects like Management Accounting, Financial Accounting, Advanced Corporate Finance, Derivatives, and Investments. (email: proftvv@gmail.com).

V. Viswaprakash, Valliammai Engineering College

is an Associate Professor at SRM Valliammai Engineering College, Chennai, with over 19 years of academic and industry experience. He holds a Ph.D. in Management from Bharathiyar University. His expertise includes Financial Management, Strategic Management, and Marketing. He has published several research papers in reputed journals and presented papers at national and international conferences, contributing significantly to management education, research, and student development. (email: drviswaprakash@gmail.com).

R. Alexzander, Silicon City College (Autonomous)

is an Associate Professor and Head of the Department of Management at Silicon City College (Autonomous), Bengaluru. He has over 15 years of teaching experience and one year of corporate experience. His expertise includes finance, marketing, and general management. He has published research articles in reputed journals and actively contributes to academic development through research, training programs, conferences, and curriculum development initiatives (email: alexklency@gmail.com).

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