Author(s)

Juntao Hou

Corresponding Author

Juntao Hou

Abstract

As the financial field enters a new stage, this paper, based on behavioral finance theory, reveals the challenges and opportunities faced by the economic area through in-depth research on the fluctuation characteristics of the securities market. First, it uses a novel method to explain the relationship between changes in the content of behavioral finance theory and the fluctuation characteristics of securities markets. Second, an in-depth analysis of the challenges brought by behavioral finance theory and the fluctuation characteristics of the securities market is conducted. We pointed out that investors’ overreaction led to market imbalances, and volatile decision-making errors caused market risks. In the face of these challenges, we proposed response strategies such as two-way identification, risk sharing, and rational analysis, emphasizing the interconnection between behavioral finance theory and the securities market and the importance of risk governance and regulation. Ultimately, we call for achieving high-quality securities market development and enabling the financial industry to meet social needs by strengthening internal circulation, building interactive mechanisms, and establishing an evaluation system.

Keywords

Behavioral finance theory; Securities market fluctuation characteristics; Financial challenges; Industrial innovation and development