Investment behavior of retail investors in response to COVID-19 economic impact payments

Woosung Jung, Donghyun Kim and Hong Kee Sul

Economics Letters, 2023, vol. 233, issue C

Abstract: This study investigates the impact of Economic Impact Payments (EIPs) on retail stock trading and the stock market using Robinhood data. We find that during the EIP period, there was a surge in retail investors who adopted a contrarian strategy by purchasing stocks that experienced significant declines due to COVID-19. However, these stocks relatively underperformed over the following six months, suggesting potential biases in retail investment decisions. Furthermore, a decrease in market quality was observed in these stocks.

Keywords: Individual investors; Economic stimulus; Robinhood (search for similar items in EconPapers)
JEL-codes: E62 G11 G12 G14 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523003956

DOI: 10.1016/j.econlet.2023.111370

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