THE INFLUENCE OF SOCIAL MEDIA AND FINANCIAL NEWS ON INVESTMENT DECISIONS: A BEHAVIORAL FINANCE PERSPECTIVE

Abstract

The research paper delves into the changing dynamics of investment behaviour in the modern digital era. As a result of the growing influence of digital communication and real- time information, emerging economies like India have witnessed a significant transformation in the way individuals make investment decisions. Due to this shift, the traditional reliance on financial advisors, market reports, and institutional recommendations is increasingly being replaced by insights gathered from social media platforms and financial news channels. This behavioral shift has brought to light a new area of academic and practical interest—the impact of digital content on investor psychology and decision-making. In recent years, platforms like Twitter, YouTube, Reddit, and Telegram have become primary sources of market sentiment and stock recommendations. Financial influencers and viral news now have the power to move markets and influence public opinion in real time. The study focuses on understanding how such content gives rise to behavioral biases such as herd behavior, overconfidence, fear of missing out (FOMO), and confirmation bias, which often cloud rational investment judgment. The research adopted a survey-based methodology, targeting individual investors across different backgrounds, age groups, and investment experience levels. The objective is to assess their dependency on social media and financial news, the nature of investment decisions made thereafter, and the emotional or psychological factors driving such actions. This initiative holds the potential to contribute meaningfully to the field of behavioural finance by: • Highlighting the psychological effects of digital financial exposure on investors. • Understanding the growing gap between rational analysis and emotionally influenced decision-making. P A G E 1 0 • Providing insights into how information overload affects portfolio choices, risk appetite, and trading frequency. The findings are expected to aid investors, financial educators, policymakers, and market regulators by offering a clearer picture of how digital trends are reshaping the financial decision-making ecosystem. That India is witnessing such behavioural evolution in its investor base signifies the beginning of a new chapter in its economic development, where the power of information is as critical as the investment itself. It is yet to be seen whether this trend will lead to sustainable financial growth or expose investors to new-age risks driven by digital speculation and hype.