Investors’ herd behavior related to the pandemic-risk reflected on the GCC stock markets

Abdeldayem, Marwan Mohamed; Dulaimi, Saeed Hameed Al

doi:10.18045/zbefri.2020.2.563

Cited by 3 publications

(5 citation statements)

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“…The value of γ 3 was also significantly negative throughout the full sample period. This result is consistent with Fang et al (2021) and Abdeldayem and Al Dulaimi (2020). In contrast, the research results do not indicate herding behavior in developed European markets.…”

Section: Findings and Discussionsupporting

confidence: 87%

“…It is important to point out that the results largely depend on the methodology used. Abdeldayem and Al Dulaimi (2020) showed that the risk associated with the coronavirus pandemic has a statistically significant impact on the herding behavior of investors in the Gulf Cooperation Council (GCC) stock markets by using the cross-sectional standard deviation (CSSD) in the first quarter of 2020. Bouri et al (2021) found a strong relationship between herding behavior in global stock markets and COVID-19-induced financial market uncertainty.…”

Section: Introductionmentioning

confidence: 99%

“…Bouri et al (2021) found a strong relationship between herding behavior in global stock markets and COVID-19-induced financial market uncertainty. A considerable number of publications investigated herd behavior in Asian stock markets during the COVID-19 pandemic (Jiang et al 2022;Abdeldayem and Al Dulaimi 2020;Bharti and Kumar 2021;Dhall and Singh 2020).…”

Section: Introductionmentioning

confidence: 99%

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Herding Behavior in Developed, Emerging, and Frontier European Stock Markets during COVID-19 Pandemic

Bogdan

Suštar

Draženović

2022

JRFM

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The behavior of market participants often does not rely on market signals, but replicates the investment decisions of other parties. The convergence of their investment behavior leads to the emergence of herd behavior with negative implications for financial stability. Moreover, this phenomenon may be even more pronounced in times of crisis. Although herding is an interesting topic which invites the interest of academic researchers, it still has not been sufficiently studied in terms of comparing the herd effect between differently developed stock markets. The first objective of this research was to determine the herd behavior during the COVID-19 pandemic using static and rolling regression analysis. The second objective was to investigate whether the herd behavior was triggered by the pandemic, while the third objective was to compare the differences in herd behavior between differently developed European stock markets. The results show that this phenomenon is most pronounced in emerging markets, followed by frontier markets and developed markets. Therefore, the results of this study are of particular importance for individual and institutional investors to achieve efficient risk diversification and for financial authorities to establish rules and avoid an increase in herd behavior.

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Section: Findings and Discussionsupporting

confidence: 87%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Herding Behavior in Developed, Emerging, and Frontier European Stock Markets during COVID-19 Pandemic

Bogdan

Suštar

Draženović

2022

JRFM

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“…Kizys et al (2021) in their study including 72 markets from Europe, the US, South America, Asia, and Africa also report the existence of herding in most of the markets during the COVID-19 pandemic. Other notable studies which have reported the presence of herding in different markets during the pandemics of SARS and COVID-19 include inter alia, Asia-Pacific (Yang et al, 2015), Vietnam and Taiwan (Luu & Luong, 2020), Thailand (Khanthavit, 2020), Europe (Espinosa-Méndez & Arias, 2021), GCC countries (Abdeldayem & Dulaimi, 2020). The extant literature on the impact of pandemics on herding in equity markets is limited and still evolving, thus the present research will provide notable contribution to the literature.…”

Section: Literature Reviewmentioning

confidence: 99%

Exploring Herding Behaviour in Indian Equity Market during COVID-19 Pandemic: Impact of Volatility and Government Response

Bharti

Kumar

2021

Millennial Asia

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This study investigates the behavioural bias of market-wide herding in the Indian equity market during the spread of COVID-19 pandemic. The study also examines the impact of market volatility and government response on herding during the sample period. We use the measure of cross-sectional absolute deviation and semi-parametric estimator of quantile regression for the period 1 January 2020 till 15 June 2020 for S&P CNX Nifty Index and its 50 constituent companies. The results obtained reveal significant herding in the Indian equity market that is aggravated by market volatility. Further, we find that the government response and control measures implemented are successful in reducing herd behaviour. The research calls for better information disclosure guidelines to promote market efficiency. We further suggest that during exogenous events, investors need to realign their portfolios and formulate trading strategies for better risk-return management.

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“…In this context, several studies have been conducted to examine the possibility of the herding effect in financial markets in different parts of the globe. The findings of Chang et al (2020), Abdeldayem and Al Dulaimi (2020), Abd-Alla (2020), Espinosa-Méndez and Arias (2020, 2021), Bouri et al (2020), Wu et al (2020), Riaz et al (2020), Rahman and Ermawati (2020), Mnif et al (2020), Lee et al (2021) and Kizys et al (2021) support the presence of herding effect during the COVID-19 public health crisis. Particularly, the findings of Bouri et al (2020) reveal the presence of a strong herding effect in emerging stock markets, and thus, it depends on the development status of an economy.…”

Section: Literature Reviewmentioning

confidence: 89%

Do Banking and Financial Services Sectors Show Herding Behaviour in Indian Stock Market Amid COVID-19 Pandemic? Insights from Quantile Regression Approach

Mishra

2021

Millennial Asia

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In India, the coronavirus (COVID-19) pandemic-induced country-wide regulatory lockdown and consequential supply-chain disruptions and market instability have all posed serious challenges before the regulators and policymakers. Amid the pandemic, the stock market showed return volatilities primarily due to the unexpected investors’ behaviour. One of the behavioural biases is herding, which has the power to wreck the market equilibrium and shatter the market efficiency. Given that the pandemic has generated unprecedented spirals of uncertainties across the globe, thereby creating interruptions in the pattern of stock market investment decisions, this study examined the herding behaviour of 54 stocks of banking and financial services sectors listed in the national stock exchange. In the quantile regression framework, the study provides evidence of the presence of herding for public sector banking and financial services under the bull market conditions during the pandemic in the 90th quantile of the return distribution. This finding has implications for the mispricing of financial assets in these sectors. So, the study suggests removing information asymmetry among the market participants and devising policy initiatives for ensuring market stability.

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Investors’ herd behavior related to the pandemic-risk reflected on the GCC stock markets

Cited by 3 publications

References 0 publications

Herding Behavior in Developed, Emerging, and Frontier European Stock Markets during COVID-19 Pandemic

Herding Behavior in Developed, Emerging, and Frontier European Stock Markets during COVID-19 Pandemic

Exploring Herding Behaviour in Indian Equity Market during COVID-19 Pandemic: Impact of Volatility and Government Response

Do Banking and Financial Services Sectors Show Herding Behaviour in Indian Stock Market Amid COVID-19 Pandemic? Insights from Quantile Regression Approach

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