EconPapers    
Economics at your fingertips  
 

Herding where retail investors dominate trading: The case of Saudi Arabia

M. Arifur Rahman, Shah Saeed Chowdhury and M. Shibley Sadique

The Quarterly Review of Economics and Finance, 2015, vol. 57, issue C, 46-60

Abstract: We investigate herding in the Saudi stock market, where more than 95% of the total trading is initiated by the individual investors. Based on readily available stock data, we find evidence of pervasive herding among the market participants. Although herding is prevalent irrespective of market conditions, it tends to get stronger in periods when the market rises and the trading activity intensifies. Traders are found to be indifferent to important stock categories in their herd behavior. Further analysis suggests that the correlated behavior of Saudi traders is unlikely to be induced by the common movements in fundamentals. Considering the unique composition of the market clientele, we interpret these findings as constituting market level evidence supporting a commonly held belief in the literature that the individual investors are more likely to be noise traders.

Keywords: Market-wide herding; Retail investors; Dispersion of return; Dispersion of beta; Saudi stock market (search for similar items in EconPapers)
JEL-codes: G11 G12 G14 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062976915000034
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:57:y:2015:i:c:p:46-60

DOI: 10.1016/j.qref.2015.01.002

Access Statistics for this article

The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:quaeco:v:57:y:2015:i:c:p:46-60