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1 – 10 of over 1000This article aims to clarify the mechanism by which herding behavior influences perceived market efficiency, investment decisions and the performance of individual investors…
Abstract
Purpose
This article aims to clarify the mechanism by which herding behavior influences perceived market efficiency, investment decisions and the performance of individual investors actively trading on the Pakistan Stock Exchange (PSX).
Design/methodology/approach
The deductive approach was used in this study, as the research is based on the theoretical framework of behavioral finance. A questionnaire and cross-sectional design were employed to collect data from the sample of 309 investors trading on the PSX. The collected data were analyzed using SPSS and AMOS graphics software. Hypotheses were tested using structural equation modeling (SEM).
Findings
The article provides further empirical insights into the relationship between herding behavior and investment management and perceived market efficiency. The results suggest that herding behavior has a markedly negative influence on perceived market efficiency and investment performance, while positively influencing the decision-making of individual investors.
Originality/value
The current study is the first to focus on links between herding behavior and investment management activities and perceived market efficiency. This article enhances the understanding of the role that herding behavior plays in investment management and, more importantly, it improves understanding of behavioral aspects and their influence on investment decision-making in an emerging market. It also adds to the literature in the area of behavioral finance, specifically the role of herding behavior in investment management; this field is in its initial stage, even in developed countries, while little work has been done in developing countries.
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Our study focuses on analyzing the trading behaviour of the investors who invest in these currencies to review their trading patterns which may help us to understand the price…
Abstract
Purpose
Our study focuses on analyzing the trading behaviour of the investors who invest in these currencies to review their trading patterns which may help us to understand the price formation of cryptocurrencies in this market.
Design/methodology/approach
We used Chang et al. (2000) measure to calculate herding that is based on cross-section absolute dispersion of stock returns (CSAD). We further analyse the nature of the same in different market regimes, that is up market, down market, high volatile market, low volatile market etc.
Findings
Applying different methodologies both static and time varying, we find that herding is pronounced when the market is either passing through stress or has become highly volatile. Anti-herding is found in a less volatile market or in a bullish market.
Practical implications
Our results are also helpful for the policy makers in designing stricter regulations to provide safe investment environment to the investors.
Originality/value
Our study in an extension of the literature in same direction and contribute in numerous ways. As the number of digital currencies is growing day by day and we have around 2,200 digital currencies trading across the world, we increased our sample size up to 100 most traded currencies. While majority of the studies cover the period 2015–2018, our study comprises the largest sample size starting from August 2013 to April 2019. We use the static model to find herding and simultaneously try to detect herding under different market regimes: up market and down market.
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Kim-Lim Tan, Joseph Kee-Ming Sia and Daniel Kuok Ho Tang
Coronavirus disease (COVID-19) pandemic has given rise to different dimensions of uncommon human behavior, and panic buying is one of them. Interestingly, panic buying research…
Abstract
Purpose
Coronavirus disease (COVID-19) pandemic has given rise to different dimensions of uncommon human behavior, and panic buying is one of them. Interestingly, panic buying research has not been given much attention. The purpose of this paper is threefold. Firstly, it examines the influences of the theory of planned behavior (TPB) elements (subjective norm, attitude and perceived behavior control (PBC)) on panic buying. Secondly, it investigates online news and the perceived likelihood of being affected (PLA) as antecedents to the TPB constructs. Finally, to examine online news verification as a moderator on the relationship between the TPB constructs and panic buying.
Design/methodology/approach
Data were collected from 371 respondents and analyzed using the partial least squares method structural equation modeling (PLS-SEM). PLS predict was applied to determine the predictive power of the model further.
Findings
This study found that subjective norms and attitude influence panic buying. The results further revealed that online news has a direct influence on the PLA and attitude. However, PBC has no such effect on panic buying. Surprisingly, online news verification also has no moderating effects on the relationships between the TPB elements and panic buying.
Originality/value
This research helps to understand consumer panic buying behavior, especially during shock events such as the COVID-19 pandemic. This study is the first that extends the TPB incorporating both online news and PLA as antecedents to panic buying in the same model. Furthermore, the study serves as an initial attempt to investigate online news verification as a moderator between the link of three constructs of TPB and panic buying, contributing to existing literature. Lastly, it advances the body of knowledge on consumer behavior and contributes methodologically by introducing the PLS approach.
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Charles G. Leathers and J. Patrick Raines
During the Greenspan‐Bernanke era, the responses of Federal Reserve officials to financial crises resulted in an extraordinary involvement of the US central bank in the…
Abstract
Purpose
During the Greenspan‐Bernanke era, the responses of Federal Reserve officials to financial crises resulted in an extraordinary involvement of the US central bank in the non‐banking financial sector. The purpose of this paper is to examine the informal and evolving conceptual framework that allows Federal Reserve officials to pursue a strategy of “constrained discretion” in responding to financial disturbances.
Design/methodology/approach
Behavioural economics relies on designed psychological and economic experiments to predict behavioural biases at the group level. As an analogue applicable to understanding biases in the intuitive judgments of individual policymakers, a naïve behavioural economics approach relies on intuitive or naive psychology and the interpretation of historical events as natural experiments to explain why intuitive judgments of Federal Reserve officials will contain biases.
Findings
Under the Greenspan‐Bernanke conceptual framework, Federal Reserve officials exercise “constrained discretion” in responding to disturbances arising from macro structural changes in the financial sector. The two key concepts are the Greenspan‐Bernanke doctrine on how the Federal Reserve officials respond to financial asset price bubbles and their collapses, and Bernanke's financial accelerator. Several examples are cited in which policy errors made by Alan Greenspan were attributable to identifiable biases in his intuitive judgment. In addition, Bernanke's response to the financial crisis of 2007‐2009 was based on his interpretation of the Great Depression as a natural experiment. But that interpretation was heavily biased by the influence of Milton Friedman on Bernanke's intuitive judgment. While Federal Reserve officials will need to exercise discretionary judgment in responding to financial crises, the potential for errors due to biases in that judgment can be reduced through regulatory reforms that lessen the potential for financial crises to occur.
Originality/value
While quantitative analyses of the effects of the Federal Reserve's actions on non‐bank financial institutions and the financial markets are ongoing, little attention has been given to the psychological aspects of the intuitive judgment that influences the discretionary decisions of the policymakers.
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Ahmed Zaky, Hassan Mohamed and Gunjan Saxena
This study aims to conceptualise the panic buying behaviour of consumers in the UK during the novel COVID-19 crisis, using the assemblage approach as it is non-deterministic and…
Abstract
Purpose
This study aims to conceptualise the panic buying behaviour of consumers in the UK during the novel COVID-19 crisis, using the assemblage approach as it is non-deterministic and relational and affords new ways of understanding the phenomenon.
Design/methodology/approach
The study undertakes a digital ethnography approach and content analysis of Twitter data. A total of 6,803 valid tweets were collected over the period when panic buying was at its peak at the beginning of the first lockdown in March 2020.
Findings
The panic buying phase was a radical departure from the existing linguistic, discursive, symbolic and semiotic structures that define routine consumer behaviour. The authors suggest that the panic buying behaviour is best understood as a constant state of becoming, whereby stockpiling, food waste and a surge in cooking at home emerged as significant contributors to positive consumer sentiments.
Research limitations/implications
The authors offer unique insights into the phenomenon of panic buying by considering DeLanda’s assemblage theory. This work will inform future research associated with new social meanings of products, particularly those that may have been (re)shaped during the COVID-19 crisis.
Practical implications
The study offers insights for practitioners and retailers to lessen the intensity of consumers’ panic buying behaviour in anticipation of a crisis and for successful crisis management.
Originality/value
Panic buying took on a somewhat carnivalesque hue as consumers transitioned to what we consider to be atypical modes of purchasing that remain under-theorised in marketing. Using the conceptual lenses of assemblage, the authors map bifurcations that the panic buyers’ assemblages articulated via material and immaterial bodies.
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Jiexin Wang, Xue Han, Emily J. Huang and Christopher Yost-Bremm
The purpose of this paper is to investigate the impact of factor-based trading strategies on pricing and volume.
Abstract
Purpose
The purpose of this paper is to investigate the impact of factor-based trading strategies on pricing and volume.
Design/methodology/approach
The authors employ a regression discontinuity approach to identify abnormalities in volume or pricing around expected portfolio changes. In addition, the authors characterize more granular effects on pricing and volume as a result of portfolio re-classification through Fama and Macbeth (1973) regressions.
Findings
The authors find that firms which are predicted to transfer among the factor portfolios of Fama and French (1993) exhibit strong and statistically significant short-term variation in stock price and volume. Short-term returns around the cutoff values comprising SMB and HML tend to be temporarily high if the firm is predicted to move into a long component of a factor-mimicking portfolio, and temporarily low if moving into a short component. Similar results are apparent when examining movement in and out of the 25 size and book-to-market sorted test asset portfolios.
Practical implications
The use of portfolio strategies formulated on the basis of sorting procedures, while once upon a time a niche market in the portfolio management industry, is now ubiquitous. The results of this study raise interesting methodological questions about the pricing implications arising from these common methodologies.
Originality/value
This study makes a number of contributions. First, it contributes to the idea that the publication or dissemination of trading strategies or – more generally – common portfolio sorting methods, leads to effects on pricing and volume through commonly motivated trading pressure. In other words, recipe-like discoveries of advantageous trading strategies lead to a synthetic creation of demand. Second, by noting that a lot of factor-focused trading activity begins around July and August of each year, the study relates to existing literature which documents seasonal variation in stock returns and volume. The findings raise questions about what guides institutional investors’ portfolio allocation decisions and whether these are optimal in aggregate.
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The aim of this paper is to review Fred Lee's book A History of Heterodox Economics.
Abstract
Purpose
The aim of this paper is to review Fred Lee's book A History of Heterodox Economics.
Design/methodology/approach
The paper provides a context for Lee's research within the current debates over the financial crisis, then reviews and evaluates his analysis.
Findings
Lee has provided valuable and almost overwhelmingly meticulous documentation of the struggle to maintain space for heterodox economics within the discipline of economics, beginning before the turn of the twentieth century and continuing into the present. He is most concerned to use this research to formulate strategies to build community among heterodox economists, to provide a strong alternative to mainstream economics.
Originality/value
The author was less than convinced by Lee's suggestion that heterodox economics should emulate a professional model based on publications and citations that bears a striking resemblance to the methods of mainstream economics. That said, the author shares his belief that heterodox economics has important insights to offer economic theory and policy. In all, Lee has provided an important service in his documentation of the rise of heterodox economics as well as the attempts of mainstream economics to marginalize other schools of thought.
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Rogelio Ladrón de Guevara Cortés, Leticia Eva Tolosa and María Paula Rojo
This paper aims to provide empirical evidence for using the prospect theory (PT) basic assumptions in the Argentine context. Mainly, this study analysed the financial…
Abstract
Purpose
This paper aims to provide empirical evidence for using the prospect theory (PT) basic assumptions in the Argentine context. Mainly, this study analysed the financial decision-making process in students of the economic-administrative academic area of two universities, one public and one private, in Córdoba.
Design/methodology/approach
The analysis methodology included (1) the descriptive statistical analysis to identify the presence of the certainty, reflection and isolation effects; (2) the construction of a set of indicators on the application of the PT; (3) the chi-squared independence test, to determine if the decisions made are independent of the degree course taken; (4) the non-parametric Kruskal–Wallis test, to determine if the decisions made by individuals vary according to the semesters taken or students' levels of progress; and (5) the non-parametric Mann–Whitney test, to determine if there are differences between the decisions made by men and women.
Findings
The empirical results provided evidence on the effects of certainty, reflection and isolation in both universities, concluding that the study participants make financial decisions in situations of uncertainty based more on PT than on expected utility theory.
Originality/value
This study contributes to the empirical evidence in a different Latin-American context, confirming that individuals make financial decisions based on the PT independently of their degree course, semester, level of advance, gender or the kind of university where they belong (public or private).
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Mohammad Omar Farooq and Md. Hasib Reza
The purpose of this paper is to apply technical analysis to some leading Islamic indices and explore if these indices are amenable to the same kind of analysis as applied to…
Abstract
Purpose
The purpose of this paper is to apply technical analysis to some leading Islamic indices and explore if these indices are amenable to the same kind of analysis as applied to conventional indices and whether technical analysis, in contrast with fundamental analysis, produces distinct or superior return.
Design/methodology/approach
In this paper, some basic tools of TA to Dow Jones Islamic Market US Index (IMUS) is applied in comparison with the three major market indices: Dow Jones Industrial Average, S&P 500 Index and NASDAQ 100. For TA, we apply moving averages, MACD and Stochastics as indicators. The paper is written particularly for those with interest in Islamic finance, but not necessarily familiar with TA. This paper thus also explores some Shariah-related issues in effectively applying TA.
Findings
The comparative analysis shows that the performance based on IMUS can be improved, when TA is applied.
Research limitations/implications
Robust tools of TA play an important role in market research. This paper probably is the first to apply TA in the context of Islamic finance. Because the scope of this paper is limited (only Dow Jones Islamic USA Index and comparison with three leading market indices), more in-depth research is needed and possible, which it is hoped this paper will encourage.
Practical implications
The successful application of the basic TA tools to Islamic index will encourage the practitioners of Islamic finance to research and explore further uses and effectiveness of TA on other Islamic products.
Originality/value
This paper is probably the first application of TA to Islamic finance markets, written especially for those who take active interest in the financial market from Islamic perspective.
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