Mobile Trading Apps And Overconfidence: Do Gen Z And Millennial Investors In India Trade More Impulsively Than Older Cohorts?

Abstract

The rapid growth of mobile trading applications (MTAs) has transformed retail investing in India by providing investors with instant market access, real-time information, and seamless trade execution. While these platforms have increased market participation, they have also raised concerns regarding behavioural biases that influence investment decision-making. This study examines the relationships among mobile trading app usage, financial literacy, overconfidence bias, and impulsive trading behaviour, while comparing these behavioural patterns across Generation Z, Millennials, and Generation X and Old investorsin India. A quantitative research design was employed to investigate the proposed relationships using advanced statistical techniques, including reliability analysis, confirmatory factor analysis, structural equation modelling, mediation analysis, and generational comparisons.

The findings indicate that mobile trading app usage significantly increases investor overconfidence, whereas financial literacy is negatively associated with overconfidence. Overconfidence bias, in turn, significantly influences impulsive trading behaviour and serves as a key mediating mechanism through which both mobile trading app usage and financial literacy affect investors' trading decisions. The results further reveal that the direct effects of mobile trading app usage and financial literacy on impulsive trading behaviour are not significant, suggesting that investor overconfidence is the primary psychological pathway linking these factors to impulsive trading. In addition, significant generational differences were observed, with Generation Z exhibiting the highest levels of overconfidence and impulsive trading behaviour, followed by Millennials, while older investors demonstrated comparatively lower behavioural bias.

This study contributes to the behavioural finance and fintech literature by highlighting the psychological mechanisms underlying investor behaviour in digital trading environments. The findings offer valuable implications for financial institutions, fintech platform developers, regulators, and policymakers by emphasizing the need to strengthen financial literacy initiatives and incorporate behavioural safeguards within mobile trading applications to promote responsible and informed investment decision-making.