EMOTIONAL INTELLIGENCE AS INVESTMENT RATIONALITY DETERMINANT: A STUDY OF INDIVIDUAL INVESTORS IN EMERGING REGIONAL MARKETS IN WEST BENGAL

Abstract

This present research study focuses on the role of emotional intelligence (EI) in shaping the investment rationality among the individual investors, with specific focus on emerging regional markets of West Bengal. Here, it has been shown that different traditional financial theories, like, efficient market hypothesis (EMH) assumes the rational and utility-maximising behaviour in investment context, but behavioural finance highlights the influence of psychological and emotional factors. By using a deductive approach, grounded in EI and behavioural finance theories, this research has employed a structured questionnaire survey of 75 individual investors across chosen districts of West Bengal. The data has been analysed through PLS-SEM, by using SmartPLS4. Findings show that EI significantly influences both investment behaviour under market uncertainty and rational investment decision-making. Particularly, self-regulation and reflective thinking are the critical dimensions to mitigate the biases, such as, panic selling, herd behaviour and overconfidence. Results confirm that EI has both direct as well as indirect effects on the rationality, acting as a stabilising psychological resource to address the issues, like, limited financial literacy and informal advisory networks. This study therefore contributes to the literature of behavioural finance by empirically validating EI as a determinant of the rationality in the area of underexplored regional markets. This study offers some practical implications for the policymakers, educators and advisors to integrate EI training into the financial literacy initiatives. Strengthening EI among retail investors can foster the resilience and promote sustainable financial behaviour in volatile markets.