The Impact of Herding Effect on National Participation Decisions—Empirical Evidence from Belt and Road Participating Countries

DOI

10.2991/978-94-6239-801-6_51How to use a DOI?

Keywords

Behavioral Finance; Herding Effect; Two - way Fixed Effects

Abstract

Current research mostly explain outward foreign direct investment (OFDI) location selections from rational angles, for example, the economic aspects of the host nation. Nevertheless, the common occurrence of “clustering investment” and “collective setbacks” implies that irrational herding behavior might be quite significant. As the Belt and Road Initiative (BRI) progresses, the participation decisions of countries along the route show notable spatial agglomeration and sequential following features. Using panel data from 105 BRI - participating countries from 2013 to 2025, this paper creates a country - level “BRI Exposure” index and systematically studies the herding effect on national participation decisions with a lagged peer exposure variable. Empirical findings reveal that a country’s BRI participation degree is notably and positively affected by its peer countries’ previous participation levels, suggesting a significant “demonstration effect”. To put it specifically, a 1% increase in the average exposure of peer countries results in an almost 0 increase in the domestic country’s current exposure. 187%. Heterogeneity analysis indicates that this herding effect is more powerful in geographically near and low - income country groups. It implies that higher information asymmetry leads countries to depend more on observing neighbors’ conduct for decision - making. This study adopts the perspective of behavioral finance. Its aim is to discover behavioral motivations beyond the “rational economic man” assumption, offering crucial practical warnings for policymakers in promoting regional cooperation and preventing investment risks.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Haozhe Tian
PY  - 2026
DA  - 2026/10/23
TI  - The Impact of Herding Effect on National Participation Decisions—Empirical Evidence from Belt and Road Participating Countries
BT  - Proceedings of the 2026 2nd International Conference on Financial Innovation and Marketing Management (FIMM 2026)
PB  - Atlantis Press
SP  - 472
EP  - 483
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-801-6_51
DO  - 10.2991/978-94-6239-801-6_51
ID  - Tian2026
ER  -