Overconfidence Bias in Equity Market: A Comparative Analysis of Market Uncertainty and Tranquil Periods in Asian Economies

Mohit Verma and Mansi Panwar
Additional contact information
Mohit Verma: O.P. Jindal Global University, Lecturer, Finance and Accounting
Mansi Panwar: Devi Ahilya Vishwavidyalaya, Doctoral Scholar, School of Commerce

A chapter in Proceedings of the Sustainability in Emerging Economies - Integrating Business Excellence in Management Education (SEE-IBEME-2024), 2025, pp 357-375 from Springer

Abstract: Abstract The current study aims to examine the phenomenon of overconfidence bias in Asian stock markets, encompassing both market stress and tranquil periods. Utilizing daily data spanning from January 1, 2013, to April 30, 2023, the study employed bivariate vector autoregression (VAR) models and impulse response functions. The findings of the VAR model yield several significant conclusions. First, within our sample period, a notable and substantial correlation between market return and volume seems more prominent in advanced and rapidly expanding emerging markets such as China. Further, investors are more confident in the advanced market during the turbulence caused by the Covid-19 lockdown. The findings indicate that throughout the Russia-Ukraine crisis, Chinese and Thai investors exhibited assertive, overconfident behaviour. The implications of overconfidence bias, which ranges from investor protection to economic stability, demonstrate the significance of understanding and addressing behavioural biases in financial decision-making. This study is one of the early attempts to examine the empirical evidence of overconfidence bias at a cross-country level in the aftermath of the recent global crisis.

Keywords: Overconfidence Bias; Behavioral Finance; Vector Autoregression; Asian Equity Markets (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:advbcp:978-94-6463-696-3_22

Ordering information: This item can be ordered from
http://www.springer.com/9789464636963

DOI: 10.2991/978-94-6463-696-3_22

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().