COVID-19 Pandemic and Investor Herding in International Stock Markets
Elie Bouri (),
Riza Demirer (),
Rangan Gupta () and
Jacobus Jacobus ()
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Jacobus Jacobus: Department of Economics, University of Pretoria, Pretoria, South Africa
No 202089, Working Papers from University of Pretoria, Department of Economics
This study examines the effect of the recent novel coronavirus pandemic on investor herding behavior in global stock markets. Utilizing a daily newspaper based index of uncertainty associated with infectious diseases, we show a strong association between herd formation in stock markets and COVID-19 induced market uncertainty. The herding effect of COVID-19 induced market uncertainty is particularly strong for emerging stock markets as well as European PIIGS stock markets that include some of the hardest hit economies in Europe by the pandemic. The findings establish a direct link between the recent pandemic and investor behavior in financial markets.
Keywords: COVID-19; International Stock Markets; Investor Herding (search for similar items in EconPapers)
JEL-codes: C22 G15 (search for similar items in EconPapers)
Pages: 16 pages
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:202089
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