Individual investor perceptions and behavior during the financial crisis

Arvid Hoffmann, Thomas Post and Joost Pennings ()

Journal of Banking & Finance, 2013, vol. 37, issue 1, 60-74

Abstract: Combining monthly survey data with matching trading records, we examine how individual investor perceptions change and drive trading and risk-taking behavior during the 2008–2009 financial crisis. We find that investor perceptions fluctuate significantly during the crisis, with risk tolerance and risk perceptions being less volatile than return expectations. During the worst months of the crisis, investors’ return expectations and risk tolerance decrease, while their risk perceptions increase. Towards the end of the crisis, investor perceptions recover. We document substantial swings in trading and risk-taking behavior that are driven by changes in investor perceptions. Overall, individual investors continue to trade actively and do not de-risk their investment portfolios during the crisis.

Keywords: Financial crisis; Individual investors; Investor perceptions; Trading behavior; Risk-taking behavior (search for similar items in EconPapers)
JEL-codes: D14 D81 G01 G11 G24 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (162)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:1:p:60-74

DOI: 10.1016/j.jbankfin.2012.08.007

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