Psychological and demographic predictors of investment in cryptocurrencies during a crisis in the MENA region: the case of Lebanon

Abstract

PurposeThe purpose of this study is to discover the motivating factors for cryptocurrency investment during an economic crisis in the MENA region, with reference to the economic crisis of 2019–2022, in Lebanon.Design/methodology/approachThe authors used t-test, and logistic regressions on a sample of 254 Lebanese investors to differentiate between cryptocurrency investors, and non-investors. Linear regressions of a subsample of cryptocurrency investors determined the factors that explained increasing cash investment in cryptocurrencies. Data were collected from investors in Lebanon, which could limit the generalization of the research results across the MENA region.FindingsInvestors differed from non-investors in that they were male, owned investments in the stock, bond and commodity markets, had prior investment experience in cryptocurrencies, were risk-takers and had expectations of high returns. Investors increased the dollar investment in cryptocurrencies, if they were male, as they invested more funds in securities, had previously invested in cryptocurrencies and had stronger risk-taking propensity. Expectations of high returns drove investors to cryptocurrencies, but such expectations do not stimulate further cryptocurrency investment.Originality/valueThis study is an initial attempt to comprehend the reactions of investors in the MENA region to a currency crisis that triggered investment in cryptocurrencies following the collapse of fiat currencies, central bank default and restrictions on bank withdrawals.

Financial Behaviour, Financial Self Efficacy and Intention to Invest in Cryptocurrency

“…Bitcoin, Ethereum, Litecoin, and Dogecoin are some examples of the thousands of cryptocurrencies that exist in the world today. In some countries, cryptocurrencies are rapidly growing as an alternative to cashless transactions, such as cross-border remittances (El-Chaarani et al, 2023). In 2020, there were 10 countries whose citizens owned large amounts of cryptocurrency.…”

“…This study focuses on investor personality qualities such as a predilection for innovation (PI) and risk-taking proclivity (RTP) (El-Chaarani et al, 2023). According to the literature, PI is defined as the capacity to monitor and respond to essential environmental innovations (Hossain, 2021).…”

Cryptocurrency Trading and Downside Risk

“…Studies focusing on market efficiency (e.g., Nadarajah and Chu 2017;Tran and Leirvik 2020), volatility patterns and investment behaviors (El-Chaarani et al 2023), as well as the portfolio and hedging implications of cryptocurrencies (e.g., Bouri et al 2017;Conlon and McGee 2020) show the importance of being able to accurately estimate and forecast the volatility behaviors of these unique digital assets. A vine copula approach is used by Syuhada and Hakim (2020) to build a dependence model and provide value-at-risk (VaR) projections.…”