GREEN INVESTMENT OR MARKET HYPE? INVESTIGATING HERDING BIAS IN GREEN FINANCE

Abstract

This study intends to examine the moderating role of green financial literacy for the relationship between herding bias and overconfidence bias on the green investment decisions. The study established that perceived behavioral biases affect green investment decisions negatively in many ways through the influence of irrationality by surveying 320 investors. However, green financial literacy eliminates those bias, they assist people in making better decisions regarding investment with an inclusion of sustainability. The study also stresses the importance of financial literacy in the improvement of good green finance practices. Therefore, by applying the behavioral finance knowledge, policy makers and financial organizations can enhance the decision making and sustainability of investors.

Keywords: Green Investment, Behavioral Finance, Herding Bias, Overconfidence Bias, Green Financial Literacy, Sustainable Finance, ESG Investments, Investor Psychology.