Abstract

The increasing use of financial technology (FinTech) has changed the way retail investors engage in equity markets since access to information, digital trading platforms, and investment analytics has been improved. Moreover, the occurrence of high volatility in the market has increased the challenges in information processing, emotional regulation, and assessment of risk. Although a lot has been studied about financial literacy, FinTech, and investment behavior, it is still not clear how these factors interact in volatile market environments. The study investigated the dynamics of investor response to equity market volatility and created the biomathematical model, reflecting the experience of investors. The study used qualitative grounded theory, where semi-structured in-depth interviews with 35 retail equity investors actively using FinTech services and going through serious market fluctuations were conducted. The data was processed by means of open coding, axial coding, and selective coding using NVivo. The findings revealed that there are six key categories which influence investor behavior: financial literacy, the impact of FinTech, information overload, cognitive reaction, emotional reaction, and risk perception. The study also discovered three investor categories: resilient investors, adaptive investors, and reactive investors, and created a biomathematical model that characterizes the relationship between behavioral states and investment decisions in a volatile market.