Behavioral Economics: How Well Do Investors in Serbia Predict The Stock Prices?

Dora Petronijević

The European Journal of Applied Economics, 2018, vol. 15, issue 1, 110-122

Abstract: The main goal of this paper is to investigate whether investors in Serbia can predict future stock prices. This research has been inspired by a number of similar researches conducted in other countries. The research has been conducted on two Belgrade Stock Exchange's indexes: BELEX 15 (represents the market movement of stock prices) and BELEX Sentiment (represents the aggregate investors’ predictions of future stock prices behavior). In methodological sense, this analysis was made by using Vector Auto-regression (VAR) model and Granger causality model. The results show that investors in Serbia are not very successful in prediction of future prices. The research also shows that investors have based their expectations on historical prices, which resulted in bad predictions. The results of this research are in cohesion with the previous researches conducted in other developing, transitional countries.

Keywords: behavioral finance; irrational investor; prediction of stock prices; investor sentiment; market noise (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:sng:ejae01:98

DOI: 10.5937/EJAE15-16665

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