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Herding behaviour in the Chinese and Indian stock markets

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  • Lao, Paulo
  • Singh, Harminder

Abstract

The existence of herding behaviour challenges the validity of the “efficient market hypothesis”. This study examines herding behaviour in the Chinese and Indian stock markets; our findings suggest that herding behaviour exists in both. The level of herding depends on market conditions. In the Chinese market, herding behaviour is greater when the market is falling and the trading volume is high. On the other hand, in India the study finds that it occurs during up-swings in market conditions. Herding behaviour is more prevalent during large market movements in both markets. In relative terms, a lower prevalence of herding behaviour was detected in the Indian stock market.

Suggested Citation

  • Lao, Paulo & Singh, Harminder, 2011. "Herding behaviour in the Chinese and Indian stock markets," Journal of Asian Economics, Elsevier, vol. 22(6), pages 495-506.
    • Handle: RePEc:eee:asieco:v:22:y:2011:i:6:p:495-506
    DOI: 10.1016/j.asieco.2011.08.001
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    References listed on IDEAS

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    More about this item

    Keywords

    G1; Herding; Market efficiency;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets

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