IDEAS home Printed from https://ideas.repec.org/a/hin/complx/5745916.html
   My bibliography  Save this article

Institutional Investor Information Sharing, Stock Market Extreme Risk, and Financial Systemic Risk

Author

Listed:
  • Xiao-Li Gong
  • Zhi-Qiang Du

Abstract

To analyze whether information sharing in the institutional investors plays the role of a market stabilizer or risk booster, this paper constructs the institutional investor information network employing the common holding stocks of the mutual funds as links. The information linkages between two funds with large positions in the same stock are hypothesized to be connected to each other. Then, we use the information sharing efficiency in the fund networks to study the effects of information transmission on stock market extreme risk and financial systemic risk. Especially, the speed of information diffusion in the network is characterized by the topology structures based on social network theory. Empirical research studies find that the Chinese fund information network exhibits small-world characteristics, which reflects rapid speed of information diffusion. Seen from the idiosyncratic risk of volatility, information sharing of institutional investors can improve the behavior consistency of fund managers, thus increasing the stock volatility via herd effects. Besides, it can be concluded that institutional investor information sharing can reduce the extreme risk by promoting the comprehensiveness of information flow and the market pricing efficiency of stocks, thereby reducing the degree of financial systemic risk. The obtained conclusions provide suggestions for decision-making of institutional investors. It can help the regulators to pay attention to the herd effects so as to control systemic risk.

Suggested Citation

  • Xiao-Li Gong & Zhi-Qiang Du, 2020. "Institutional Investor Information Sharing, Stock Market Extreme Risk, and Financial Systemic Risk," Complexity, Hindawi, vol. 2020, pages 1-10, April.
    • Handle: RePEc:hin:complx:5745916
    DOI: 10.1155/2020/5745916
    as

    Download full text from publisher

    File URL: http://downloads.hindawi.com/journals/8503/2020/5745916.pdf
    Download Restriction: no
    File URL: http://downloads.hindawi.com/journals/8503/2020/5745916.xml
    Download Restriction: no
    File URL: https://libkey.io/10.1155/2020/5745916?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alin Marius Andrieş & Mihaela Brodocianu & Nicu Sprincean, 2023. "The role of institutional investors in the financial development," Economic Change and Restructuring, Springer, vol. 56(1), pages 345-378, February.
    2. Chen, Zhang-HangJian & Wu, Wang-Long & Li, Sai-Ping & Bao, Kun & Koedijk, Kees G., 2024. "Social media information diffusion and excess stock returns co-movement," International Review of Financial Analysis, Elsevier, vol. 91(C).
    3. Xiang, Youtao & Borjigin, Sumuya, 2024. "Investment network and stock’s systemic risk contribution: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 94(C), pages 113-132.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hin:complx:5745916. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mohamed Abdelhakeem (email available below). General contact details of provider: https://www.hindawi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.