The Financial Lobster Bias

The Financial Locust Bias describes how small and medium-sized enterprise (SME) owners, driven by a false perception of liquidity, pursue unsustainable expansion until financial collapse occurs. This study draws a behavioral and biological parallel between this process and the transformation of solitary grasshoppers into destructive locust swarms, a phenomenon triggered by environmental stimuli. Using financial data from Spanish SMEs (2000–2024) and advanced machine-learning models, the research confirms that liquidity misperception strongly correlates with elevated bankruptcy risk and cyclical overexpansion. Empirical findings validate the predictive capacity of two behavioral-finance indicators—the Perceived Liquidity Error Index (PEL) and the Illusory Confidence in Liquidity Index (ICEL)—as early-warning metrics for liquidity-driven collapse. The integration of these indices with AI-based forecasting enables the identification of critical behavioral thresholds preceding financial distress. By modeling the transition from rational to collective irrational behavior, the study offers a neuroeconomic framework for mitigating liquidity illusions and fostering sustainable growth in SMEs.