Emotions play a significant role in shaping investment decisions, influencing risk-taking behaviours and financial strategies. Emotional intelligence (EI) contributes to investors’ ability to manage uncertainty, make rational choices, and assess potential risks effectively.
The ability to identify, comprehend, and control one's own and other people's emotions is a component of emotional intelligence. Emotional intelligence (EI) enables people to remain calm, control impulsive behavior, and modify their approach in the face of volatile market conditions. Emotional intelligence (EI) is not about being emotionless, but rather about mastering emotions via the use of social skills, self-awareness, empathy, and emotional control to maximize financial decisions.
Research Objective: The purpose of this study is to examine the direct and indirect effects of emotional intelligence (EI) on investment decision-making by examining the ways in which particular EI dimensions—such as empathy, self-awareness, and emotional regulation—affect investors' perceptions of risk, behavioral biases, and investment strategies. Additionally, the study aims to categorize investors according to their EI profiles and investigate the ways in which these profiles align with psychological characteristics and behavioral finance concepts.
Objectives of the study
The objective of this study is to investigate how different aspects of emotional intelligence (EI) affect investing choices through investor categorization, risk perception, and cognitive-emotional biases. The study specifically looks at how emotional intelligence (EI) characteristics influence behavioral patterns including impulsivity, herding behavior, and strategic risk orientation. Linking investor typologies to psychological traits and EI profiles—beyond the Big Five personality framework—is a primary goal.
Focus of the Study
This study explores the relationship between emotional intelligence (EI) and investing decisions, focusing on how EI influences decision-making strategies through interactions with investor typologies, risk perception, and cognitive-emotional biases. To find patterns of impulsivity, herding behavior, and strategic risk orientation among investor subgroups, the study will classify investors into asset-based (such as gold, real estate), safe-haven (such as fixed deposits), socially responsible/ESG, and speculative investors. To clarify the dynamic interaction between psychological qualities and EI profiles, the research goes beyond well-known frameworks such as the Big Five personality traits (Saweris, 2024)^[46].