HERDING BEHAVIOR IN CHINA'S GREEN ENERGY STOCKS

Abstract

This paper employs panel data regression to investigate the intricate relationship between monetary and fiscal policies and investor behavior in China's green energy stocks market, with a primary emphasis on the phenomena of herding behavior and risk-averse conduct. Anchored in financial and behavioral economics theories, which posit that economic policy tools may exert significant impacts on investor actions, this study offers a profound understanding of the complexities of investor behavior. This result suggests that changes in interest rates, money supply, and government spending have a notable impact on investor behavior in the context of green energy stocks. Investors in this market appear to be influenced by these economic policy variables, and their decisions tend to exhibit both herding behavior and risk-averse tendencies in response to changes in these factors. The findings of this study not only illuminate the substantial influence exerted by monetary and fiscal policies on both herding behavior and risk-averse conduct in China's green energy stocks market but also demonstrate that all variables, namely interest rates, money supply, and government spending, exhibit statistically significant associations with these investor behaviors. This outcome underscores the multifaceted interplay between government policies and investor actions in the context of sustainability-focused investments.