Has financial attitude impacted the trading activity of retail investors during the COVID-19 pandemic?

Abstract

Financial attitude influences the financial behavior of retail investors. Although the extant research has acknowledged and examined this relationship, the measures of financial attitude and behavior still vary widely and are generally posed as a series of questions rather than statements. In addition to this, there is insufficient knowledge regarding retail investors' behavior in the face of a health crisis, such as the current COVID-19 pandemic. This study addresses these gaps in the prior literature by examining the relative influence of six dimensions of financial attitude, namely, financial anxiety, optimism, financial security, deliberative thinking, interest in financial issues, and needs for precautionary savings, on the trading activity of retail investors during the pandemic. Data were collected from 404 respondents and analyzed using the artificial neural network (ANN) method. The results revealed that all six dimensions had a positive influence on trading activity, with interest in financial issues exerting the strongest influence, followed by deliberative thinking. The study thus contributes important inferences for researchers and managers.

The Influence of Investment Motivation and Financial Literacy on Interest in Investing During the COVID-19 Pandemic

“…Thesefindings support and strengthens previous studies related to the influence of investment motivation and financial literacy in determining interest in investingin the capital market. These findings corroborate Planned Behavior Theory as reviewed in several previous research [4], [17].…”

“…Indonesian Stock Exchange investors who have a high level of financial literacy tend to increase their investment interest. The period of the COVID-19 pandemic has not reduced their interest in investing, this is relevant to research results in a number of other countries [4], [10].…”

“…The COVID-19 pandemic has greatly influenced market projections, fluctuations in market assumptions and supply chain uncertainty. Furthermore, the COVID-19 pandemic also influenced investor behavior that affected trading activities on the stock exchange [3], [4].…”

Social media affordances and information abundance: Enabling fake news sharing during the COVID-19 health crisis

“…47,48 During the COVID-19 pandemic, there was enormous and abundant of information on social media which lead to potential information overload and triggered a lot of negative behaviour. 8,49 It has been shown that when humans are overloaded by information, it leads to fatigue, 50 and once humans are fatigued, it reduces their ability to verify the information they encounter. 8 Relating this to the pandemic, it could be argued that when individuals are overloaded with information, they are less likely to go extra trouble of verifying information sources and this could lead to the consumption and further proliferation of fake news.…”

Using E-GARCH to Analyze the Impact of Investor Sentiment on Stock Returns Near Stock Market Crashes

“…Early research claimed that noise traders were not important to the formation of financial asset prices (Fama, 1965;Stephen, 1976;Khrennikova, 2016). Talwar et al (2021) looked at the decision-making process of investors from the perspective of psychology and pointed out that individual investors could easily be affected by emotional factors or cognitive biases, leading to unreasonable trading behaviors. Baker and Wurgler (2006) also proved that investor sentiment could affect stock returns.…”