The Empirical Study Of Investment Behavior And Cognitive Bias Of Individual Investors In The Internet Financial Market

Since the subprime mortgage crisis outbroke in the United States of America during 2007,the regulation of financial industry has tightened,and China’s banking industry has re-established stricter supervision policies.Small and medium enterprises and individuals are facing serious financing constrains due to the strict risk supervision of the banking industry.On the other hand,the personal savings ratio is relatively high,and personal investment and financing channels are scarce.In such a macroscopic background,the rapid development of internet financial have sprung up in China,disintermediation trading patterns reduced the transaction costs,alleviated the information asymmetry in the financial markets,improved the efficiency of capital supply and demand side to match it.In 2016,the third-party payment transactions in China are about 80 trillion China yuan.By December 31,2017,China’s peer-to-peer(P2P)online lending industry has accumulated more than 6 trillion yuan of transaction volume.At the same time,however,the problems of the internet financial institutions running,falling,self-financing,fraud and illegal fund-rising have begun to emerge.As the pattern of Pratt&Whitney financial,internet financial investors on the market main body is ordinary non-professional public investors,the internet platform for financial problems have brought serious economic loss directly to large number of investors,increased the investor’s investment risk,leading to the instability in financial markets.Existing on the internet,however,the mainstream of the financial research focuses on the investigation in the development of the internet financial regulation policy,and attempts to regulatory policy of the governments the internet financial platform and Angel of view explanation at the root of the problems such as financing subject and ignore the internet investment main body in the financial markets of individual investors’ investment behavior research.The behavioral biases that investors identify on internet financial platforms,such as herd behavior,are also important reason for investment risk.This paper attempts to make up for the deficiency of existing research in the investment behavior and cognitive bias of investors in internet financial market.On the basis of absorbing existing research results,this paper analyzes the macro background and main features of China’s Internet finance development.In the meantime,I use China’s urban-level Internet financial development index to describe the status of China’s urban Internet finance development.Based on this,from the perspective of investors in the Internet financial market,a series of hypotheses about "herd behavior," "bystander behavior," "education recognition behavior," and "description of information recognition behavior" were proposed.On the basis of the principles of human capital theory,signal theory,investor behavior theory and cognitive theory,this paper discusses whether investors can recognize the value of education,whether or not there is a dynamic change in investor behavior and whether the investors’ cognition of the text information has some problems such as cognitive bias,etc.By using the data on the development of city-level Internet data,the trading data on pat loans and credit lending platforms,and the big data information on crowdfunding investment data from crowdfunding networks,this paper conducted the empirical tests on the basis of related propositions.First of all,this article uses the Internet financial development index to portray the status quo of China’s Internet finance.It finds that the intermediation of Internet finance breaks the geographical restrictions of the financial financing,but the development of Internet finance presents significant geographical differences,reflecting the characteristics of industrial agglomeration.The eastern region,especially the Yangtze River Delta and the Pearl River Delta region,has a relatively high level of Internet finance development.The Internet investment and Internet insurance in the eastern region are more distinct from those in the central and western regions.Secondly,based on the theory of human capital and signal theory,this paper puts forward several hypotheses about the identification of education information by investors,and uses China’s first P2 P network lending platform to take 100,000 online loan transaction data from the loan platform,from the borrower’s interest rate and loan repayment performance.The dimensions examine the investors’ ability to identify and recognize the educational value of borrowers.Based on the theory of human capital and signal theory,this paper puts forward several hypotheses about the identification of education information by investors,and uses China’s first P2 P network lending platform to take 100,000 online loan transaction data from the loan platform to examine the investors’ ability to identify and recognize the educational value of borrowers from the perspective of borrower’s interest rate and loan repayment performance.The empirical results show that,after controlling for other personal characteristics and project characteristics of the borrower,the borrower’s interest rate for borrowers with bachelor’s degree is lower than that for the specialist academic borrower,and the interest rate that the investor gives to the male borrower through academic qualification promotion is reduced.More than female borrowers the empirical results show that,after controlling for other personal characteristics and project characteristics of the borrower,the borrower’s interest rate for borrowers with bachelor’s degree is lower than that for the specialist academic borrower,and the interest declining rate that the investor gives to the male borrower through academic qualification promotion is higher than that to female borrowers.This may explain that investors can effectively recognize the value of education,and from the perspective of loan repayment performance,the college graduates have a higher probability of overdue and a longer overdue period than borrowers with a bachelor degree.Therefore,it is rational for the lender to give the undergraduate degree borrower a lower interest rate than the borrower with specialist qualifications,which indicates that there is no bias in the behavior of the investor in recognizing the academic record information.Moreover,from the perspective of the dynamic changes of investor behavior,this paper uses the 10236 transaction data of crowdfunding platform in our country to explore the changes in investor behavior caused by changes in the psychological characteristics of investors in China’s crowdfunding market.The research results show that,unlike the single flock behavior of investors in the traditional capital market,the behavior of investors in the Internet financial market changes with the project financing period.In the early stage of crowdfunding project financing,the information asymmetry is relatively serious.It is easier for investors to follow suit to invest in projects with higher financing progress.The herd effect is more significant.By the middle of project financing,investors’ herd behaviors have weakened,and the bystander effect caused by the psychological characteristics of responsibility proliferation has gradually become significant.In the late stage of financing,the investor’s behavior of the bystanders weakened due to the cut-off effect.Further,this article examines the influence of project heterogeneity on investor behavior and strictly finds that in the early stage of project financing where information is relatively symmetrical,the irrational behavior of investors is not significant,and the behavior of the bystanders of investors during the financing of medium-term investors also greatly reduced.This shows that the mitigation of information asymmetry can effectively weaken the investors’ flock behavior and bystander behavior.At last,in this paper,from the three dimensions of loan project success rate,borrowing interest rate and the time required for full standard,based on the transaction big data of the auction loan platform,the author discusses the conjugation errors in the borrower’s perception of the soft information or borrowing description in the borrowing project phenomenon,and from the perspective of behavioral economics,it reveals the reasons for the emergence of corporate failures in the online lending platform.The study finds that borrowers on internet lending platforms prefer borrowing the items with more description words.Specifically,under the conditions of controlling project characteristics and borrower characteristics and other hard information,the higher the loan descriptive word number is,the higher the success rate of the project loan is,the lower the successful loan interest rate is,and the shorter the time required for the loan item to reach the full mark.There is a fallacy in the perception of the borrower’s description of borrowing information by investors on internet lending platforms.