Two decades after the published evidence of herd behavior in the Vietnam stock market

2020 ◽  
Author(s):  
Quan-Hoang Vuong
Keyword(s):  
Stock Market ◽  
Herd Behavior ◽  
Published Evidence

André died in 2017, but our joint publications continue to live.

Determinants of Trading Decision: An Experiential Examination

GIS Business ◽  
2018 ◽  
Vol 13 (1) ◽  
pp. 1-9
Author(s):  
Gunjan Sharma ◽  
Tarika Singh ◽  
Suvijna Awasthi
Keyword(s):  
Stock Market ◽  
Capital Markets ◽  
Capital Market ◽  
Capital Mobility ◽  
Influential Factors ◽  
Herd Behavior ◽  
Human Beings ◽  
The Past ◽  
The Government ◽  
Indian Stock Market

In the midst of increasing globalization, the past two decades have observed huge inflow of outside capital in the shape of direct and portfolio investment. The increase in capital mobility is due to contact between the different economies across the globe. The growing liberalization in the capital market leads to the growth of various financial products and services. Over the past decade, the Indian capital market has witnessed numerous changes in the direction of developing the capital markets more robust. With the growing Indian economy, the larger inflow of funds has been fetched into the capital markets. The government is continuously working on investor’s education in order to increase retail participation in the Indian stock market. The habits of the risk-averse middle class have been changing where these investors started participating in the Indian stock market. It is an explored fact that human beings are irrational and considering this fact becomes imperative to investigate factors that influence the trading decisions. In this research, ‘an attempt has been made to investigate various factors that affect the individual trading decision’. The data has been collected from various stockbroking firms and from clients of those stockbroking firms their opinions were recorded by means of a questionnaire. Data collected through the structured questionnaire, 33 questions were prepared which was given to the 330 respondents on the basis of convenience sampling out of which 220 individuals filled questionnaire, the total of 200 questionnaires was included in the study after eliminating the incomplete questionnaire. Various factors are being explored from the literature and then with the help of factor analysis some of the most influential factors have been explored. Factors like overconfidence, optimism, cognitive bias, herd behavior, advisory effect, and idealism are the factors which influenced the trading decision of the investors the most. Such kind of a study is contributing in the area of behavioral finance as a trading decision is an important aspect while investing in the stock market. And this kind of study would be helping and assisting financial advisors to strategies for their clients in making the right allocation and also the policy maker and market regulators to come up with better reforms for the Indian stock markets.

AVALANCHE DYNAMICS OF THE FINANCIAL MARKET

2005 ◽  
Vol 01 (02) ◽  
pp. 275-283 ◽  
Author(s):  
PEI-LING ZHOU ◽  
CHUN-XIA YANG ◽  
TAO ZHOU ◽  
MIN XU ◽  
JUN LIU ◽  
...  
Keyword(s):  
Stock Market ◽  
Interaction Parameter ◽  
Financial Market ◽  
Real Life ◽  
Percolation Model ◽  
Dynamics Simulation ◽  
Herd Behavior ◽  
The Real ◽  
Avalanche Dynamics ◽  
Simulation Results

A parsimonious percolation model for stock market is proposed, of which the avalanche dynamics agree with the real-life one as well. We have also investigated how the interaction parameter p affects the price dynamics. Simulation results about the formation of the bullish/bearish market and corresponding avalanche taking place in the market indicate that the magnified "herd behavior" resulting from the evolution of p may be the origin of the observed avalanche phenomena.

scholarly journals Herding in Chile: the case of equity trading in the Chilean pension fund market

2020 ◽  
Vol 18 (1) ◽  
pp. 23
Author(s):  
Roberto Stein ◽  
Pedro Miranda ◽  
Rodolfo Risco
Keyword(s):  
Performance Evaluation ◽  
Stock Market ◽  
Pension Fund ◽  
Equity Markets ◽  
Pension Funds ◽  
Herd Behavior ◽  
Equity Trading ◽  
Money Managers ◽  
Two Measures ◽  
The Stability

The phenomena of ‘herding’ or herd behavior can have important effects when it manifests in equity markets as co-movement in trades of institutional money managers. On one hand, the assetsunder management are so large in comparison with the size of themarket that the trades of these managers affect asset prices, evenmore so if many managers trade in the same direction. On the otherhand, commissions and fees paid by investors are supposedly leviedin exchange for an expert management of the investors’ capital.Thus, a manager that simply imitates the behavior of others does notadd value with her work. The present study is the first to report theresults of two measures of herding used to study this phenomenon inthe equity portions of Chilean AFP (pension) funds. One measure isthe widely used Lakonishok, Vishny y Shleifer (1992) metric, theother is a relatively newer measure presented in Sias (2004). Using adataset of monthly fund trades during the period 2003-2011, bothmeasures find herding in the Chilean market which, while moderatein intensity, is still higher than that reported in the stock markets ofdeveloped countries. More interesting is the asymmetry of results:herding is stronger during times of market crisis, and almostdisappears during periods when the economy expands. These resultshave important implications for performance evaluation and valueadded of the pension funds managed by the AFPs, as well as theimpact of their trades in the stability of the stock market.

Shifts in Herd Mentality of Investors in Uncertain Market Conditions: New Evidence in the Context of a Frontier Stock Market

2018 ◽  
Vol 10 (3(J)) ◽  
pp. 203-219 ◽  
Author(s):  
Kalugala Vidanalage Aruna Shantha
Keyword(s):  
Stock Market ◽  
Learning Effect ◽  
Stock Exchange ◽  
Psychological Effects ◽  
Herd Behavior ◽  
Absolute Deviation ◽  
Cross Sectional ◽  
Post Market ◽  
And Behavior ◽  
New Evidence

This paper examines the herding phenomenon in the context of a frontier stock market, the Colombo Stock Exchange of Sri Lanka, employing the cross - sectional absolute deviation methodology to daily frequencies of data for the period from April, 2000 to September, 2016. The results show significant changes in magnitude and pattern of herding over different episodes of the market. The herd behavior is strongly presence irrespective of the direction of the market movement in the 2000 - 2008 period, during which investments in the stock market is affected by the country’s political instability resulting from the civil war. The evidence also shows herd behavior during the period of market bubble whereas negative herding in the market crash period. However, it becomes less likely to occur during the period after the market crash. The lower tendency to herd during the post- market crash period supports the Adaptive Market Hypothesis, implying that investors are likely to realize the irrationality of herding and learn to be more rational as a consequence of significant losses experienced during the period of the market crash. Accordingly, these findings suggest that period- specific characteristics of the market and the associated psychological effects to investors such as overconfidence and panics would cause changes to their beliefs and behavior, the experiences of which would subsequently produce learning effect to minimize their irrationality in decision making.

Impact of behavioral factors on investors’ financial decisions: case of the Egyptian stock market

2019 ◽  
Vol 12 (1) ◽  
pp. 30-55 ◽  
Author(s):  
Noura Metawa ◽  
M. Kabir Hassan ◽  
Saad Metawa ◽  
M. Faisal Safa
Keyword(s):  
Stock Market ◽  
Behavioral Finance ◽  
Investor Sentiment ◽  
Investment Decisions ◽  
Demographic Characteristics ◽  
Individual Investors ◽  
Herd Behavior ◽  
Behavioral Factors ◽  
Content Type ◽  
Positive Effects

Purpose This paper aims to investigate the relationship between investors’ demographic characteristics (age, gender, education level and experience) and their investment decisions through behavioral factors (sentiment, overconfidence, overreaction and underreaction and herd behavior) as mediator variables in the Egyptian stock market. Design/methodology/approach This paper collects data from a structured questionnaire survey carried out among 384 local Egyptian, foreign, institutional and individual investors. This paper used a partial multiple regression method to analyze the effect of investors’ demographic characteristics on investment decisions through behavioral factors as the mediator variable. Findings Investor sentiment, overreaction and underreaction, overconfidence and herd behavior significantly affect investment decisions. Also, age, gender and the level of education have significant positive effects on investment decisions by investors. Experience does not play a significant role in investment decisions, but as investors gain experience, they tend to overlook the emotional factors. Practical implications The findings of this paper would help to understand common behavioral patterns of investors and indicate a path toward the growth of the Egyptian stock market. Originality/value There is a lack of research in behavioral finance covering Middle East and North African markets. This paper attempts to fulfill the gap by analyzing behavioral factors in the Egyptian market.

scholarly journals An Examination of Herd Behavior in The Indonesian Stock Market

2012 ◽  
Vol 4 (1) ◽  
Author(s):  
Adi Vithara Purba ◽  
Ida Ayu Agung Faradynawati
Keyword(s):  
Stock Market ◽  
Herd Behavior

What make investors herd while investing in the Indian stock market? A hybrid approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muskan Sachdeva ◽  
Ritu Lehal ◽  
Sanjay Gupta ◽  
Aashish Garg
Keyword(s):  
Stock Market ◽  
Fuzzy Ahp ◽  
Hybrid Approach ◽  
North India ◽  
Second Phase ◽  
Herd Behavior ◽  
Herding Behavior ◽  
Two Phase ◽  
Content Type ◽  
Indian Stock Market

PurposeIn recent years, significant research has focused on the question of whether severe market periods are accompanied by herding behavior. As herding behavior is a considerable cause of the speculative bubble and leads to stock market deviations from their basic values it is necessary to examine the motivators which led to herding behavior among investors. The paper aims to discuss this issue.Design/methodology/approachIn this study, the authors performed a two-phase analysis to address the research questions of the study. In the first phase, for text analysis NVivo software was used to identify the factors driving herding behavior among Indian stock investors. The analysis of a text was performed using word frequency analysis. While in the second phase, the Fuzzy-AHP analysis techniques were employed to examine the relative importance of all the factors determined and assign priorities to the factors extracted.FindingsResults of the study depicted Investor Cognitive Psychology (ICP), Market Information (MI), Stock Characteristics (SC) as the top-ranked factors driving herding behavior, while Socio-Economic Factors (SEF) emerged as the least important factor driving herding behavior.Research limitations/implicationsThe current study was undertaken among stock investors from North India only. Moreover, numerous factors are not part of the study but might significantly influence the investors' herding behaviors.Practical implicationsComprehending the influences of the different factors discussed in the study would enable stock investors to be more aware of their investment choices and not resort to herd behavior. This research enables decision-makers to understand the reasons for herd activity and helps them act accordingly to improve the stock market's performance.Originality/valueThe current study will provide an inclusive overview of herding behavior motivators among Indian stock investors. This study's results can be extremely useful for both academics and policymakers to gain some insight into the functioning of the Indian stock market.

The analysis of exchange rate on herd behavior of stock market in China under extreme condition

2021 ◽  
Vol 7 (1) ◽  
pp. 19-25
Author(s):  
Xiaoying Zhou ◽  
Yushi Zhang ◽  
Congcong Liang ◽  
Xiaojian Su
Keyword(s):  
Exchange Rate ◽  
Stock Market ◽  
Extreme Condition ◽  
Herd Behavior

Relationship between Herd Behavior and Chinese Stock Market Fluctuations during a Bullish Period Based on Complex Networks

2021 ◽  
pp. 1-17
Author(s):  
Yong Shi ◽  
Yuanchun Zheng ◽  
Kun Guo ◽  
Xinyue Ren
Keyword(s):  
Stock Market ◽  
Composite Index ◽  
Big Data Analysis ◽  
Mobile Internet ◽  
Investor Behavior ◽  
Herd Behavior ◽  
Chinese Stock Market ◽  
Pairwise Correlation ◽  
Market Sentiment ◽  
The Relationship

Herding has a great impact on stock market fluctuations, and it is possible for researchers to analyze the herding effect due to the recent popularity of mobile Internet and the development of big data analysis technology. In this paper, we propose both investor-based and stock-based sentiment propagation networks of Chinese stock markets based on the simple pairwise correlation of posts’ sentiment indexes. And the relationship between the herding effect and Chinese stock market fluctuations is studied by comparing the network indicators with the Shanghai Securities Composite Index (SSCI) and the Causeway International Value Index (CIVIX). Through the experimental results, we find that the indicators are indeed ahead of the Chinese stock market. This study is the first attempt to model stock market sentiment by using a complex network, and it proves that investor behavior has a great effect on the stock market.

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