Testing the animal spirits theory for ethical investments: further evidence from aggregated and disaggregated data

Fredj Jawadi, Nabila Jawadi and Abdoulkarim Idi Cheffou
Additional contact information
Nabila Jawadi: IPAG Business School
Abdoulkarim Idi Cheffou: ISG International Business School

Annals of Operations Research, 2024, vol. 333, issue 1, No 17, 479 pages

Abstract: Abstract This study aims to test the animal spirits theory by Akerlof and Shiller (Animal spirits - how human psychology drives the economy, and why it matters for global capitalism? Princeton University Press) for ethical stock markets using Islamic and sustainable stock indexes during calm and crisis periods. This question helps determine whether ethical finance is driven more by its specific rules or determined by animal spirits. We used data covering January 1996–September 2021, which includes both calm periods and crisis periods (dot-com bubble of 2000, subprime crisis of 2007, global financial crisis of 2008–2009, and COVID-19 recession). Accordingly, we applied different time series tests, ran a quantile regression, and built an econometric framework to empirically test the animal spirits theory. We provide two key findings. First, investor sentiment and consumer confidence significantly affect the dynamics of both ethical stock returns, suggesting further evidence of animal spirits. This finding supports the assumption that investors’ emotions and sentiments affect their behaviors and related feelings, for example, spontaneous instinctive that urge to action than inaction, optimism, and so forth, might help to apprehend some investment actions. Second, and interestingly, animal spirit effects enter asymmetrically and nonlinearly as their effects on ethical stock returns are time-varying and vary with the quantile under consideration.

Keywords: Animal spirits; Ethical investments; Quantile regression; Nonlinearity (search for similar items in EconPapers)
JEL-codes: C22 G15 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10479-022-04832-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Testing the animal spirits theory for ethical investments: further evidence from aggregated and disaggregated data (2022)
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:spr:annopr:v:333:y:2024:i:1:d:10.1007_s10479-022-04832-y

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-022-04832-y

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().