The Effect Of Irrational Behavior Of Investors On The CSI 300

Owing to the traditional finance theory can not offer a reasonable explanation for the more and more anomalies of the stock market at present, behavioral Finance forms a new theory with psychology, which is based on the doubt about the traditional financial theory. In general, a country's stock market is associated with its economic development situation. After the financial crisis, China's economy restores rapidly after the adjustment of the new policy, however, the stock market fails to get corresponding development. The CSI 300 Index reflects the overall trends of the A share market in China, which plays a quite important role in the stock market. Meanwhile, the CSI 300 Stock Index Futures Contract has been listed on since April 16th,2010 with the CSI 300 index as the subject matter. As the new financial derivative developed in China, it has the promising prospect. But owing to the leverage effect of the Stock Index Futures, the returns and risk of the contract can be magnified more than it really is. In addition, the irrational behavior of investors who are lack of the appropriate awareness of knowledge and risk intensifies the fluctuation of the CSI 300 Index. In this paper, the author firstly describes the situation and the fluctuation trends of the CSI 300 Index by applying the behavioral finance in the stock market. Then it can draw a conclusion that the CSI 300 Index is asymmetric with the rise and fall of the market and the behavior is more obvious when the market is falling by using GARCH model and Asymmetric GARCH Model. In addition, it can conclude that the herd behavior is extremely obvious with the great rise and fall of the CSI 300 Index by using the dispersion degree of CASD index, and it is more obvious in the great fall.