The research team, led by Rajesh Raut of the MIT School of Distance Education in Pune, together with colleagues at Indira University and MIT World Peace University, surveyed 448 active Indian investors, predominantly working professionals aged 30 to 60 who managed their own portfolios. Participants were recruited through purposive sampling and screened to ensure meaningful financial experience: only investors with portfolios above 5 lakh rupees and at least one year of investment experience were retained. The sample skewed male at 65.18 percent, and just over half of respondents held portfolios valued between 11 and 20 lakh rupees.

The study’s central question was how emotional intelligence, or EI, translates into investment performance. Drawing on Goleman’s framework, the researchers treated EI as a composite of five competencies: self-awareness, self-regulation, motivation, empathy, and social skills. Their theoretical argument is that these capacities allow investors to appraise risk more objectively, stay composed during turbulence, and make deliberate, goal-aligned decisions rather than impulsive, emotionally charged ones.

To test this, the team built a structural equation model that simultaneously traced several psychological pathways. Emotional intelligence was modeled as a direct driver of investment performance, but also as an indirect one, operating through two mediators: overconfidence bias and self-regulation. Financial literacy, meanwhile, was tested as a moderator that could amplify or dampen the EI-performance link. This integrated design is what the authors describe as the study’s key novelty, since prior work had typically examined these constructs one or two at a time rather than within a single unified model.

The statistical results were striking. Emotional intelligence showed a strong positive association with investment performance, with a standardized path coefficient of 0.465, significant at p < 0.001. Even more dramatic was the relationship between EI and overconfidence bias: a coefficient of -0.871, indicating that emotionally intelligent investors were far less prone to the inflated self-assessments that behavioral economists have long linked to excessive trading and poor returns. Overconfidence itself negatively affected performance, with a coefficient of -0.194, confirming the classic behavioral finance finding that investors who overestimate their predictive abilities tend to underperform.

Both mediation pathways held up under rigorous testing. Using a bootstrap procedure with 5,000 resamples, the researchers found that the indirect effect of EI on performance through reduced overconfidence was statistically significant, and the indirect effect through enhanced self-regulation was significant as well. In plain terms, emotional intelligence appears to work through two channels: it suppresses the cognitive distortions that lead investors to overtrade and hold losing positions, and it strengthens the self-control needed to resist panic selling and speculative impulses during volatile markets.

Financial literacy emerged as a powerful amplifier. The interaction between emotional intelligence and financial literacy significantly strengthened the EI-performance relationship, with a moderation coefficient of 0.128. The authors interpret this through the lens of social learning theory: emotional intelligence provides the affective and motivational capacity to act wisely, while financial literacy supplies the cognitive content and analytical tools needed to convert that capacity into well-informed decisions. Neither alone is sufficient; the combination is what drives superior outcomes.

The methodological rigor of the study deserves attention. The measurement model demonstrated excellent fit, with a comparative fit index of 0.980 and a root mean square error of approximation of 0.039, both well within accepted thresholds. Composite reliability exceeded 0.87 for all constructs, and average variance extracted surpassed 0.57, confirming convergent validity. Harman’s single-factor test indicated that common method bias was unlikely to distort the results, and variance inflation factors for all predictors remained well below conservative multicollinearity thresholds. The structural model itself fit the data satisfactorily, with a CFI of 0.970 and RMSEA of 0.055.

Still, the authors are careful about what these numbers can and cannot show. Because the data are cross-sectional and self-reported, the findings represent associations rather than proven causal effects. The purposive sampling strategy and the exclusion of smaller portfolios introduce socioeconomic selectivity, meaning the results may not generalize to retail investors with modest holdings. The five-item EI measure, while consistent with prior behavioral finance research, is an abbreviated operationalization of a complex, multidimensional construct, and the authors recommend that future studies employ more comprehensive, psychometrically validated instruments.

The practical implications, however, are substantial. The authors argue that financial institutions should integrate emotional intelligence training into investor education programs, teaching self-awareness and impulse control alongside market analysis and risk assessment. Financial advisors could incorporate EI assessments into client profiling to tailor advice to individual emotional biases, and fintech platforms could embed behavioral prompts that encourage investors to reflect on their psychological state before executing significant trades. For policymakers, the findings support combining financial literacy campaigns with emotional management strategies, particularly for economically vulnerable populations. As markets grow more volatile and more individuals take responsibility for their own portfolios, the study suggests that the most resilient investors are not necessarily those with the most information, but those who can regulate their emotions well enough to use that information wisely.

Subject of Research: The role of emotional intelligence, overconfidence bias, self-regulation, and financial literacy in shaping investment performance

Article Title: Exploring the determinants of responsible investing: revisiting the role of emotional intelligence in investment behaviour

Article References: Raut, R., Rao, S., Kumar, C., Deshpande, A., & Kaul, N. (2026). Exploring the determinants of responsible investing: revisiting the role of emotional intelligence in investment behaviour. Frontiers in Behavioral Economics, 5, Article 1826273. https://doi.org/10.3389/frbhe.2026.1826273

Image Credits: AI Generated

DOI: 10.3389/frbhe.2026.1826273

Keywords: emotional intelligence, investment performance, overconfidence bias, self-regulation, financial literacy, behavioral finance, structural equation modeling, investor psychology, responsible investing, India, prospect theory, financial decision-making