The Influence of Emotional Intelligence and Behavioural Biases on Stock Market Churning Frequency: Evidence from India

Abstract

ABSTRACT:
Investor behaviour in stock markets is influenced not only by financial knowledge but also by psychological and emotional factors. Emotional intelligence (EI), reflecting an investor’s ability to perceive, understand, and regulate emotions, significantly affects decision-making under market volatility. Behavioural biases, including overconfidence, herding, loss aversion, anchoring, and the disposition effect, often mediate these decisions, contributing to excessive trading, or stock market churning. Educational bias, representing formal financial knowledge and academic exposure, may moderate the influence of emotional intelligence on behavioural biases. This study investigates the relationships among emotional intelligence, behavioural biases, and stock market churning frequency among Indian investors. Using a structured questionnaire based on a 5-point Likert scale, the research aims to provide empirical evidence of the psychological mechanisms driving investment behaviour, offering insights for investors and financial advisors to reduce irrational trading and improve investment outcomes.