Influence of Finfluencers on Investment Decision-Making: A Behavioral and Theoretical Review

Abstract

The rapid rise of financial influencers (finfluencers) on social media has significantly transformed the way retail investors engage with financial markets. While these influencers have made financial information more accessible, their growing influence raises important concerns regarding behavioural biases and decision-making patterns among investors. This study examines the role of finfluencers in shaping investment behaviour, with particular focus on psychological factors such as Fear of Missing Out (FOMO) and herding behaviour. The study adopts a Systematic Literature Review (SLR) approach, analysing research published between 2020 and 2025. Relevant studies were sourced from academic databases including Google Scholar, ScienceDirect, and ResearchGate using keywords such as “finfluencer,” “behavioural biases,” “FOMO,” and “herding behaviour.” The selected literature was examined thematically to identify recurring patterns and underlying relationships. The findings suggest that finfluencers do not directly influence market performance but play a crucial role in shaping investor sentiment and psychological responses. Their impact is largely driven by perceived credibility, relatability, and engagement, which often trigger behavioural biases and lead to impulsive and herd-driven investment decisions. Although finfluencers contribute positively by enhancing financial awareness and encouraging market participation, they also present risks related to misinformation, speculative trading, and the absence of adequate regulatory oversight. This study contributes to the existing literature by integrating key theoretical perspectives—including Behavioural Finance Theory, Prospect Theory, Information Cascade Theory, and Social Influence Theory—into a unified framework that explains the indirect influence of finfluencers on investment behaviour. The study concludes that improving financial literacy and strengthening regulatory mechanisms are essential to ensure informed and rational investment decisions in an increasingly digital financial ecosystem.