Understanding the Chinese Stockmarket Bubble: The Role of Emotion

Bellotti, Xijuan Angel; Taffler, Richard; Lin, Tian

doi:10.2139/ssrn.1695932

Cited by 8 publications

(7 citation statements)

References 11 publications

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“…Therefore, a ive-stage approach that was described and later reined is favoured in this paper [17]. This is supported by another research, which used a three-stage to ive-stage approach, too [18].…”

Section: Asset Price Bubblementioning

confidence: 66%

Comparison of Selected Market Indicators During the Dot-Com Bubble

Schubert¹,

Gavurová²,

Kováč³

et al. 2018

Financial Management From an Emerging Market Perspective

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Since the outbreak of the recent inancial crisis in 2007, central banks around the world have lowered interest rates while stock markets soared. On the example of North America, Europe, and Asia and in particular the United States, Germany, and China, the situation as of December 2015 is compared on the basis of economic theory and selected key performance indicators to the United States dot-com bubble in the nineties years of the twentieth century. Literature review ofers a complex general view on the issue of market bubbles with a historical review of the situation in 2007 and 2008. The only indication of a bubble can be found in the China Securities Index 300, more speciically in the technology sector. The further aim of the paper is related to analyse and compare returns of the explored indices among the regions and the sectors. On a broader level, the study inds that even though there are similarities, the current rise in indices does not qualify for an asset price bubble. Conclusion sums all the observed indings on both the levelsregional and national. Also, it ofers suggestions for discussion about the situation on the markets after the inancial crisis.

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Section: Asset Price Bubblementioning

confidence: 66%

Comparison of Selected Market Indicators During the Dot-Com Bubble

Schubert¹,

Gavurová²,

Kováč³

et al. 2018

Financial Management From an Emerging Market Perspective

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“…In an IS individuals see the world as it is, as a whole with its good and bad features. In the DS, however, they mentally separate good and bad feelings to live in a black and white world where the discomfort of coping with the undesired reality is prevented (Bellotti et al 2010). The IS is characterised by an awareness of multiple ideas that are to a certain extent connected.…”

Section: Group Feelmentioning

confidence: 99%

Emotional Finance: As a New Approach to Understanding the Markets

Dumanli¹,

Aren

2021

JLECON

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The emotional finance theory was developed as an alternative to the mainstream theories which claim that markets are driven by investors’ conscious processes. Based on psychoanalysis, it searches the role of both conscious and unconscious processes in investment decisions. It offers new explanations regarding the causes and forecasting of the crises and bubbles that have been experienced frequently especially since the 2000s. In this framework, it makes use of concepts such as narrative, group feel, states of mind, and phantastic object, which have not been previously included in finance studies to date. This study represents the most comprehensive literature study carried out in the field of emotional finance to date. It analyses and models the fundamental components of the theory in the context of their determinants and effects. It offers findings to help market regulators, fund managers and investors understand the bubbles that occur in the markets.

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“…For, according to the conventional approach, individuals act rationally, and Adam Smith's famous "Invisible Hand" is always at work. In the case of an imbalance in the market, an invisible hand intervenes and brings the markets to the optimal level (as cited in Bellotti, Taffler, & Tian, 2010). Emotional finance sets out from concepts such as unconscious mental processes, group feel and narratives to explain the emergence of asset price balloons.…”

Section: Crises Asset Price Bubbles and Narrativesmentioning

confidence: 99%

“…Similarly, according to Taffler and Eshraghi (2012), during the 2008 crisis hedge funds and fund managers became symbols of the "richest" and the "best," and a story was created by the market that depicted "star" hedge fund managers in an exaggerated and unrealistic manner, as investment gods or gurus. Bellotti et al (2010) claim that, during the balloon that emerged in the Stock Exchange of China between 2005-2007, the radical reform initiated by the Chinese government with respect to the markets, the successive large-scale public offers, and the increases that occurred in the index created among investors the story that this time the market was "definitely different." Emotional finance not only demonstrates the asset price bubbles and the narratives that are dominant during periods of crisis, but also offers a methodology for an analysis https: //doi.org/10.15405/epsbs.2019.10.02.38 Corresponding Author: Selim Aren Selection and peer-review under Examining Figure 6, it can be seen that, in spite of a generally positive correlation among the housing prices index, the relative sentiment in the narratives on Fannie Mae, and the stock prices of Fannie Mae, this correlation appears to have become negative during the 2005-2007 critical period.…”

Section: Crises Asset Price Bubbles and Narrativesmentioning

confidence: 99%