 The Herd Behavior and the Financial InstabilityCristian Ionescu ()
Annals of the University of Petrosani, Economics, 2012, vol. 12, issue 1, 129-140 Abstract: Given the international financial situation of the last 50 years, and considering the complexity and severity of the financial crises, it is important to study the episodes of financial instability, and especially to understand both operating mechanisms and propagation mechanisms. One endogenous mechanism of financial instability is the herd behavior, which may increase the volatility and the amplitude of any sub-part of the financial system. This paper aims to analyze this phenomenon, considering the behavior of the financial market participants, the role of information in the making decisions process, banking responsibility regarding the herd behavior. The paper also illustrates two examples of herd behavior (run bank and the "too many to fail" problem), and presents three herding measures, in an attempt to achieve a quantitative analysis of the phenomenon, besides the qualitative analysis exposed above. Keywords: financial instability; herd behavior; financial markets; information; signals (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pet:annals:v:12:y:2012:i:1:p:129-140 Access Statistics for this article More articles in Annals of the University of Petrosani, Economics from University of Petrosani, Romania |
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