Abstract
Neuro finance is the interdisciplinary field that integrates neuroscience and behavioural finance to examine the decision-making mechanism. This field combines insights from neuroscience, psychology, and economics to provide a more nuanced understanding of investor behaviour, which often deviates from the perfectly rational models assumed in traditional finance. This study examines the neuro-psychological factors involved in investor behaviour during unpredictable occurrences with significant market impacts. The data was collected from 200 active retail investors in Kerala who have been regularly buying and selling stocks over the past six months, completing at least five transactions per month. The study employed Structural Equation Modeling (SEM) to examine the relationships between biases, heuristics, neurotransmitters, and investor behaviour. The results confirm that biases, heuristics, and neurotransmitters significantly influence investor behaviour during unexpected market crash, while herding behaviour has no substantial effect.
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