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Stock market performance under COVID-19: Evidence from investor behavior

Author

Listed:
  • Houssam Bouzgarrou

    (Higher Institute of Finance and Taxation of Sousse (ISFF Sousse), University of Sousse, Tunisia)

  • Zied Ftiti

    (EDC Paris Business School)

  • Wael Louhichi

    (ESSCA School Of Management)

  • Mohamed Youssfi

    (Higher Institute of Commercial Studies of Sousse (IHEC Sousse), University of Sousse, Tunisia)

Abstract

This paper aims to complete the literature of the stock markets' responses to COVID-19 news by investigating the issue of investors' psychological factors. More interestingly, we aim to assess whether investor behavior might be the transmission channel between the recent health crisis and financial markets. Empirically, we employ a time-frequency approach based on the continuous wavelet methodology to take into account the investors' heterogeneity and the potential nonlinear co-dynamics on the studied relationships. Based on daily data ranging from February to September 2020, our paper shows two interesting findings. First, we highlight that the G7 stock markets are sensitive to the severity of the health crisis over short and long horizons. Second, our results support fear of investor behavior during the period of the pandemic, as investor attention to the sell stock markets is negatively connected to G7 equity market performance.

Suggested Citation

  • Houssam Bouzgarrou & Zied Ftiti & Wael Louhichi & Mohamed Youssfi, 2024. "Stock market performance under COVID-19: Evidence from investor behavior," Economics Bulletin, AccessEcon, vol. 44(1), pages 358-372.
    • Handle: RePEc:ebl:ecbull:eb-21-00975
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    More about this item

    Keywords

    Investor psychology factors; investor attention; investor heterogeneity; GSV index; wavelet analysis.;
    All these keywords.

    JEL classification:

    • Y1 - Miscellaneous Categories - - Data: Tables and Charts
    • F3 - International Economics - - International Finance

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