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The COVID-19 pandemic and feedback trading dynamics: Unveiling global patterns

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  • Tang, Chia-Hsien
  • Lee, Yen-Hsien
  • Chen, Chan-Shin
  • Huang, Ya-Ling

Abstract

This study analyzes how the COVID-19 pandemic impacted stock markets worldwide using the COVID-19 Global Fear Index (GFI) devised by Salisu and Akanni (2020). We examine feedback trading behaviors in stock indices across 70 countries, revealing a complex relationship between pandemic-sentiment and feedback trading. Our study finds that GFI primarily motivates negative feedback trading in many developed countries, particularly those in higher latitudes, while the relationship between pandemic-sentiment and feedback trading is complex and varies across regions. Notably, China and India deviate from these patterns, exhibiting no significant feedback trading effects. These results highlight how regional differences shape financial market responses to the COVID-19 crisis. This analysis offers valuable insights into the pandemic's nuanced impact on global financial markets, emphasizing the distinct reactions across diverse geographic regions.

Suggested Citation

  • Tang, Chia-Hsien & Lee, Yen-Hsien & Chen, Chan-Shin & Huang, Ya-Ling, 2025. "The COVID-19 pandemic and feedback trading dynamics: Unveiling global patterns," Research in International Business and Finance, Elsevier, vol. 73(PB).
    • Handle: RePEc:eee:riibaf:v:73:y:2025:i:pb:s0275531924004318
    DOI: 10.1016/j.ribaf.2024.102638
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    More about this item

    Keywords

    COVID-19; Positive (negative) feedback trading; Global and local fear index;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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