Table 1.
Summary of articles on COVID-19 and trading.
| Authors | Origin | Sample | Purpose | Source | Findings |
|---|---|---|---|---|---|
| Abdeldayem and Al Dulaimi (2020) | Egypt | Part 1: NA Part 2: 318 investors in the Gulf Cooperation Council (GCC) stock market | Examined the causal association between expectations of pandemic risk and herding behavior. | Proceedings of Rijeka Faculty of Economics: Journal of Economics and Business | Expectations of pandemic risk have a significant positive impact on herding behavior in the GCC stock market. |
| Ahmad et al. (2020) | China | 230 subjects (130 orphans, 100 non-orphans) | Examined risky investment behaviors made by orphans during the COVID-19 pandemic. | Psychology Research Behavioral Management (Journal) | Orphan investors made risky investment choices, and this behavior persisted even during a pandemic. |
| Bates (2020) | USA | N. A. | Summarized the effects of the COVID-19 pandemic on investor behavior. | Bachelor’s Thesis | During the COVID-19 pandemic, biases within behavioral finance, such as overtrading and overconfidence, were observed. |
| Bharti and Kumar (2022) | India | S&P CNX Nifty Index and its 50 constituent companies | Investigated the behavioral bias of market-wide herding in the Indian equity market during the spread of COVID-19 pandemic. | Millennial Asia: An International Journal of Asian Studies | Market volatility during the COVID-19 pandemic promotes significant herding behavior in the Indian equity market. The government’s control measures successfully reduced this behavior. |
| Bu et al. (2020) | China (Wuhan) | 225 subjects, mostly graduate students | Examined how risk tolerance evolved during a worldwide health-crisis. | Sustainable Architecture for Finance in Europe | Greater exposure to COVID-19 caused less belief in luck and less sense of control; this led to more pessimistic views of the economy. Risk taking was affected by past experiences, and changes in risk taking were more affected by time-varying beliefs and optimism than general risk appetite. |
| Chang et al. (2020) | Taiwan | Renewable and fossil fuel energy markets in the USA, Europe, and Asia | Investigated herding in renewable energy, using daily closing prices in renewable and fossil fuel energy stock returns for March 24, 2000–May 29, 2020, which covers the Global Financial Crisis (GFC) (2007–2009), the coronavirus crises of SARS (2003), and the ongoing COVID-19 (2019–2020) pandemic. | Renewable and Sustainable Energy Reviews (Journal) | During SARS and COVID-19, herding was more prominent during extremely high oil returns. During COVID-19, herding was more prominent during extremely low oil returns. After the global financial crisis, investors were more sensitive to asset losses, causing them to be more likely to display herding in the stock market. |
| Chiah and Zhong (2020) | Australia | 37 international equity markets | Examined the impact of COVID-19 on trading volume in stock markets around the world. | Finance Research Letters (Journal) | There was a large spike in trading volume in the 37 international equity markets studied. Investors trade more readily in countries that are wealthier, have stronger protection of legal rights, have better governance systems and have greater gambling opportunities. |
| Chin (2021) | Malaysia | 271 investors | Examined the underlying psychological and sociological factors that drive excess trading in the Malaysian stock market during the COVID-19 pandemic. | Asian Journal of Business and Accounting | Investors with certain personality traits (higher neuroticism, lower extraversion, higher openness, higher agreeableness, lower conscientiousness) had higher trading frequency both pre and during COVID-19. Investors with certain demographics (younger age, male gender, greater household income, greater years of investment experience, being a full-time investor) also had higher trading frequency both pre and during COVID-19. |
| Dhall and Singh (2020) | India | N. A. | Examined the herding behavior at the industry level from national stock exchange (NSE). | Millennial Asia: An International Journal of Asian Studies | The COVID-19 Pandemic promoted herding behavior at the industry level, in India. |
| Espinosa-Méndez and Arias (2021a) | Chile | Australian stock market firm samples | Investigated if the COVID-19 pandemic has an effect on herding behavior in the Australian stock market. | Applied Economics Letters (Journal) | Herding behavior was observed in Australia during COVID-19. Investors initially abstained from investing during a health crisis. |
| Espinosa-Méndez and Arias (2021b) | Chile | Stock exchange samples of France (Paris), Germany (Frankfurt), Italy (Milan), UK (London), Spain (Madrid) | Investigated whether COVID-19 pandemic had an effect on herding behavior in Europe. | Finance Research Letters (Journal) | COVID-19 increased herding behavior in the capital markets of Europe. Fear and uncertainty during the pandemic might have caused less informed investors to discard their own beliefs and to follow more informed investors instead. |
| Fang et al. (2021) | China and Taiwan | Stock market samples of Russia, Poland, the Czech Republic, Hungary, Croatia, and Slovenia | Examined how and whether the COVID-19 pandemic affects herding behavior in the Eastern European stock markets. | Frontiers in Public Health (Journal) | Herding behavior in Eastern European markets were more prominent during COVID-19. |
| Gurav and Kotrappa (2020) | USA | N. A. | Analyzed investor’s sentiments considering US presidential elections and effects of COVID-19 as an explicit fluctuating factor affecting stock market performance | SSRG International Journal of Engineering Trends and Technology | Tweets regarding the pandemic and other major events (such as the US presidential elections) can be used to gauge investor sentiments and thus, the performance of the stock market via machine learning. |
| Himanshu et al. (2021) | India (Delhi and Mumbai) | 184 investors | Analyzed the impact of COVID-19 on the portfolio allocation decisions of individual investors. | Journal of Public Affairs | During the financial crisis caused by COVID-19, most investors were moving toward a more conservative portfolio. However, some investors were risk-takers – they not only kept prior investments in stocks but also invested more funds in stocks. Some investors also chose not to change their existing portfolio. |
| Hong et al. (2020) | China | ChiNext Market | Investigated the presence and the asymmetric effects of investor herding in the ChiNext market over the period from October 30, 2009, to April 30, 2020 | Romanian Journal of Economic Forecasting | Herding behavior was seen in this market, even after controlling for the effects of COVID-19. This behavior is more prominent during bearish periods, and in certain industries--including the manufacturing and IT sectors. |
| Khanthavit (2020) | Thailand | N. A. | Investigated the behavior of foreign investors in the Stock Exchange of Thailand in the time of COVID-19 as to whether trading is abnormal, what strategy is followed, whether herd behavior is present, and whether the actions destabilize the market. | Journal of Asian Finance, Economics and Business | Foreign traders’ abnormal trading volume is negative and significant during the COVID-19 period. Furthermore, foreign traders are not positive-feedback investors and they self-herd. |
| Kizys et al. (2021) | UK | 72 stock market indices across the world | Studied if government response to the novel coronavirus COVID-19 pandemic can mitigate investor herding behavior in international stock markets. | International Review of Financial Analysis (Journal) | Herding behavior was observed in the first 3 months of 2020, and a more stringent government response mitigates such behavior. |
| Krokida et al. (2020) | Greece | EU and US sample markets | Studied the relationship between conventional and unconventional central bank monetary policy and herd behavior in equity markets. | Journal of Economic Behavior & Organization | The channel through which monetary policy may affect herding behavior is economic expectations and investor sentiment. |
| Luu and Luong (2020) | Vietnam and Taiwan | N. A. | Identified the difference between the herding behavior of emerging market and frontier market during pandemics. | Journal of Asian Finance, Economics and Business | Up to 12 industries demonstrated herding behavior in Vietnam, while only 5 of 17 industries demonstrated herding behavior in Taiwan. Different industries respond differently during influenza pandemics. |
| Mand et al. (2023) | Malaysia | Sample for conventional stocks, Islamic stocks and sample for the whole market | Investigated whether market conditions have an effect on investors’ propensity to herd in an emerging economy’s stock market | PSU Research Review (Journal) | Herding behavior existed among Shariah-compliant during up and down markets |
| Mnif et al. (2020) | France | Cryptocurrency Markets (Bitcoin, Ethereum, Ripple, Litecoin, Binance) | Investigated the herding biases by quantifying the self-similarity intensity of cryptocurrency returns during the COVID-19 pandemic. | Finance Research Letters (Journal) | Herding behavior was observed in the 5 top cryptocurrency markets: Bitcoin, Ethereum, Ripple, Litecoin, Binance. However, such behavior was reduced after COVID-19 and all of these cryptocurrencies became more efficient after the pandemic. |
| Mnif and Jarboui (2021) | France | Bitcoin market | Analyzed the Bitcoin dynamics and the investor response by focusing on herd biases. | Review of Behavioral Finance (Journal) | Bitcoin was more efficient after the pandemic, showing that the pandemic reduced herding bias. |
| Naseem et al. (2021) | China, Japan, and the United States | N. A. | Analyzed investor psychology and stock market behavior during COVID-19. | Frontier Psychology (Journal) | The pandemic had a negative impact on investor sentiments, causing a downward trend in the 3 stock markets analyzed. |
| Ortmann et al. (2020) | UK | N. A. | Examined how retail investors responded to the outbreak of COVID-19. | Finance Research Letters (Journal) | Trading intensity increased by 13.9% as the number of COVID-19 cases doubled. This behavior was more prominent among investors who are male and older. |
| Gügercin and Richter (2021) | Germany | 108 participants | Investigated to what extent overconfidence influences the trading volume during the COVID-19 pandemic. | Master’s Thesis | Younger and inexperienced traders entered the market in 2020. Retail investors with more than 2 years of trading experience significantly increased their trading volume during COVID-19. During this pandemic, traders who reported that they had above average trading skills traded significantly more. |
| Riyazahmed (2021) | India | 753 investors | Analyzed the impact of investor motives and awareness on investor preferences. | Investment Management and Financial Innovations (Journal) | Following the COVID-19 outbreak, there was an increase in investment in shares, mutual funds, and life insurance in India. Furthermore, more young Indians were showing interest in high risky investments. Investors’ preferences were affected by their personal traits. |
| Valle-Cruz et al. (2022) | Mexico | N. A. | Analyzed if the polarity generated by Twitter posts influence the behavior of financial indices during pandemics. | Cognitive Computation (Journal) | Twitter posts influenced financial indices during both pandemics, but the effect was more significant during the COVID-19 pandemic. The drop in stock prices during the COVID-19 era was more dramatic than the H1N1 period as there were more speculation, rumors, and negative news. |
| Wen et al. (2022) | Hong Kong | N. A. | Conducted a systematic mechanism for herding detection in the Hong Kong stock market. | Journal of Chinese Economic and Business Studies | Herding behavior was observed in Hong Kong during the pre-Covid period (likely due to the social chaos and release of new housing policy), but not during the COVID-19 period. |
| Wu et al. (2020) | China | Shenzhen A share market and Shanghai A share market | Investigated herding behavior in the Chinese stock markets during the COVID-19 pandemic. | Emerging Markets Finance and Trade (Journal) | Herding behavior was significantly lower during COVID-19 period. Herding behavior was more significant during upside market movements, lower market trading volumes, and lower market volatility during COVID-19. |
| Yarovaya et al. (2021) | UK | Cryptocurrency Markets traded in USD, EUR, JPY, KRW | Analyzed herding in cryptocurrency markets in the time of the COVID-19 pandemic. | Journal of International Financial Markets | Herding behavior depended on up- and down-market days but was not more prominent during COVID-19. |
| Yuan (2021) | China | N. A. | Examined the existence of herding effect in Chinese A share main board market using both market-level and industry-level data by testing the non-linear relationship between cross-sectional absolute deviation of returns and market returns. | 2021 7th International Conference on E-Business and Applications | Investors in China’s A share market exhibit herding behavior, and this was exacerbated during the COVID-19 outbreak. This behavior was also more prominent when there was a negative market rate of return. Different industries were affected to different degrees. |