The fast growth of social media and digital platforms has radically changed how retail investors gain access to financial information and decision to invest. This paper is a literature review to investigate the impact of social media, online financial communities, and finfluencers on retail investor behaviour with a specific focus on emerging markets, like India. According to the previous studies, it is always noted that social media has been one of the main sources of investment related information where it provides speed, accessibility and peer related learning and at the same time it brings about behavioural biases and information asymmetry. The considered literature shows that retail investors are turning to platforms like Twitter, YouTube, Instagram, and online forums to receive updates on the market, stock recommendations, and its trading strategies. Research shows that exposure to social media materials greatly affects risk perception, confidence, and trading activity among investors. Although this type of platform improves financial awareness and engagement in the market, particularly among younger and novice investors, herd behaviour, overconfidence, and speculative behaviour are increased. The issue of finfluencers becomes a decisive factor, and several studies identify their significant influence on stock selection and timing choices, and in most cases, this has no proper regulation. Additionally, sentiment-based research has shown that market stories and crowd feelings shared on social media can influence short-term price action and investor feeling, which can add to the increased market volatility. Empirical evidence on behavioural finance shows that investors who are exposed to a stream of continuous online information become more exposed to cognitive bias like confirmation bias, loss aversion, and over-reaction to market news. Gender-oriented and demographic research also indicates different effects, meaning that, although underrepresented groups of investors can become more powerful with access to information via social media, they are also exposed to false or unproven information. Although the volume of research is increasing, there are still gaps in understanding the long-term consequences of investment based on social media and the efficacy of investor education and regulation. All the literature makes it clear that additional efforts to enhance financial literacy, ethical principles of finfluencers, and regulatory measures are necessary to reduce the risk of misinformation. On the whole, this paper has placed social media as a two-sided phenomenon, both as an enhancer of inclusive financial involvement and as a provider of behavioural and informational issues, that is why it is essential to consider a balanced, informed, and regulated use of digital financial ecosystems.
G et al. (Wed,) studied this question.
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