A Study On Individual Investor Behavior In Chinese A - Share Market

After more than 20 years of development, China’s capital market has achieved fruitful results, and basically built the multi-level capital market system with Chinese characteristics. However, compared with foreign mature capital market, China’s capital market is still in the stage of emerging and transition. Many aspects, such as the system construction, market regulation, investors’ structure, investors’ protection, investors’ education, and so on, still have a large room to improve. For a long time, among the transaction parties in the China’s capital market, the medium and small investors have always been the main power. And the phenomena of frequent trading, immature investment concept and all kinds of behavior deviations are not obviously improved by their limitations at knowledge, emotion, character, capital and so on.However, the traditional financial theory on the basis of the efficient market hypothesis, thinks that investors are perfectly rational. Obviously, these theories cannot explain the investors’ behavior deviations and so many abnormal phenomena in the capital market. But the behavior financial theory that occurred in 1950 s can do it better.So, in order to help the medium and small investors to know, understand, and effectively correct these behavioral biases, and realize orderly, healthy and stable development of capital market in China, this paper analyzes and studies the medium and small investors various behavioral deviations in the investment decision-making process through understanding, analysis and using of the behavioral financial theory, as well as the comparison with the traditional financial theory. First, this paper introduces and summarizes the current main theoretical basis in the behavioral finance theory, the mainstream investment model and investment strategy, and then, based on the relevant information and data analyses the present structure of Chinese medium and small investors’ status and behavior characteristics, and enumerate in case some of investors in the investment decision-making in the process of common cognitive and behavioral deviations. After that, this paper analyzes the medium and small investors aforementioned behavior deviations’ causes and process through the aspects of the internal psychological factors and the external objective environment.The author finds that Domestic medium and small investors exist the some characteristics. For example, in the distribution of gender, male is priority; in the distribution of age, young and middle-aged people are priority; in the distribution of career, state-owned workers accounted for about half; in the distribution of education, investors of above college degree are more than 80%; in the distribution of income, low and middle income earners are priority;At the same time, Domestic medium and small investors also have some investing features. For example, the comprehensive quality of investors presents a tendency of increasing; investors’ asset allocation too radical; investors’ motivation is simple but impractical; investor’s investment decision-making system is chaoticIn addition, the domestic medium and small investors still have all kind of behavioral deviations in the investment process, such as the availability bias, selection bias, the conformity, overconfidence and frequent trading, obviously hate regret, self-control, conservative bias, mental accounting, gambling and excessive speculation, of excessive dependence on policy, high representative deviation and superstition sends turn common psychological misconceptions and behavioral biases, and so on.To the above point of views, the author has discussed in this paper in detail.Based on the research methods of the combination of theory and practice, the combination of abstract and concrete, and the research train of thought from performance to the nature, this paper studies and summarizes the investor’s behavior deviations, and cites some actual cases that author has participated in to provide relevant theory support, and puts forward some innovative ideas and suggestions. But due to the lack of personal ability and related data, this paper also has many shortcomings. I hope that it could be enriched and perfected in the later study and research constantly.