This paper introduces a real-time, continuous measure of national sentiment that is language-free and thus comparable globally: the positivity of songs that individuals choose to listen to. This is a ...direct measure of mood that does not pre-specify certain mood-affecting events nor assume the extent of their impact on investors. We validate our music-based sentiment measure by correlating it with mood swings induced by seasonal factors, weather conditions, and COVID-related restrictions. We find that music sentiment is positively correlated with same-week equity market returns and negatively correlated with next-week returns, consistent with sentiment-induced temporary mispricing. Results also hold under a daily analysis and are stronger when trading restrictions limit arbitrage. Music sentiment also predicts increases in net mutual fund flows, and absolute sentiment precedes a rise in stock market volatility. It is negatively associated with government bond returns, consistent with a flight to safety.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
Purpose:Theory of Behavioral Finance assumes that there are various things inherent in humans such as emotions, interests, and traits that make them unable to make rational decisions. This study aims ...to analyze and find out what kind of impact heuristic behavior, risk perception, and herding bias have on investment decision making by young investors.Method:This research is a quantitative study with students at the Faculty of Economics and Business, Lambung Mangkurat University who are or have invested on the Indonesia Stock Exchange as the sample of this study. The research data comes from primary data processed using multiple linear regression analysis.Findings:The findings of this study successfully prove that there is an influence of heuristic behavior, risk perception, and herding bias on investment decisions by young investors.Originality/Value:This study uses students of the Faculty of Economics and Business, Lambung Mangkurat University as a research sample who belong to generation Z with a tendency to have higher emotions and egos, making it difficult to make investment decisions.
Consumer resistance and inertia related behaviors are as important as adoption behaviors. Resistance can lead to unwillingness on the part of the investors to invest in a particular financial ...product. On the other hand, inertia can potentially lead to loyalty, despite dissatisfaction with a financial product. Consequently, an understanding of the antecedents and outcomes of retail investors’ resistance and inertia toward investments is valuable for firms selling investment products. Although the literature on resistance and inertia is around three decades old, empirical research related to retail investment decision making has only recently gained momentum, resulting in limited but interesting findings. The current study utilizes a systematic literature review (SLR) methodology to review prior studies in this domain. The SLR presents research profiling and an extensive content analysis of the studies selected by applying a robust search protocol. The study findings highlight numerous aspects of retail investment behavior, underscore research gaps in the prior literature, and offer recommendations for future research. Furthermore, a comprehensive framework, labelled resistance adoption inertia continuance (RAIC), is proposed to investigate the behavior of retail investors. The study concludes with meaningful theoretical and practical implications that can help counter resistance and inertia toward different financial products.
•For retail investors, resistance and inertia are vital considerations for decision making.•There is little understanding of the decision making related to investors' resistance and inertia.•We conducted systematic literature review of the studies on resistance and inertia in retail investment.•We utilized the innovation resistance theory and status quo bias for developing the resistance adoption inertia continuance (RAIC) framework.•The findings of the study can guide future research and practice agendas.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
Market efficiency has been questioned since behavioural finance emerged. However, there is no theory consolidating both irrational investors' behaviour and their influence on financial markets. In ...this paper, we use bibliometrics to gain better knowledge of the current situation and trends in this research area. The results obtained by analysing the 1987-2017 period show a growth potential of Behavioural Finance. Investor sentiment is the main subject among the thirteen main subjects of this area.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
Sentiment and uncertainty Birru, Justin; Young, Trevor
Journal of financial economics,
December 2022, 2022-12-00, Volume:
146, Issue:
3
Journal Article
Peer reviewed
Sentiment should exhibit its strongest effects on asset prices at times when valuations are most subjective. Accordingly, we show that a one-standard-deviation increase in aggregate uncertainty ...amplifies the predictive ability of sentiment for market returns by two to four times relative to when uncertainty is at its mean. For the cross-section of returns, the predictive ability of sentiment for assets expected to be most sensitive to sentiment, including existing measures of both risk and mispricing, is substantially larger in times of higher uncertainty. The results hold for both daily and monthly proxies for sentiment and for various proxies for uncertainty.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
The aim of the study is to conduct a bibliometric analysis of the scientific field of Behavioral Economics and Behavioral Finance. The research was conducted using the Web of Science database, which ...returned 2617 articles, revealing that the amount of research within these fields has grown over time. Furthermore, the results also prove the relevance of the works of Daniel Kahneman and Amos Tversky for the field of Behavioral Economics and Finance, and Steven Hursh to Behavioral Economics. It is still possible to note that the field of Behavioral Economics encompasses subjects that connect human behavior with demand, consumption and price, with investments and with managerial decisions, as well as with the role played by heuristics and cognitive biases in decision‐making processes. In turn, the field of Behavioral Finance is more focused on the study of errors of judgment and of decision‐making characteristics in financial investments. Additionally, it is inferred that the field of Behavioral Economics is more wide‐ranging than the field of Behavioral Finance, as the latter is a byproduct of Behavioral Economics. Finally, a conclusion is then reached, demonstrating that the fields of Behavioral Economics and Finance have turned into an important field of study.
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BFBNIB, FZAB, GIS, IJS, IZUM, KILJ, NLZOH, NUK, OILJ, PILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
•We investigate the performance of behavioural investment strategies.•We propose a new behavioural investment objective function.•We compare the behavioural portfolio with rational and naïve ...portfolios.•We use both EUT-based and CPT-based evaluation criteria.
In this paper, we investigate the performance of behavioural portfolio strategies. We incorporate the short-term and long-term memory of the investor, thus recasting the behavioural portfolio choice process in a dynamic setting. We evaluate the out-of-sample performance of a behavioural investor in relation to both a naïve investor who invests in an equally weighted portfolio and a rational investor, who maximises expected mean-variance utility. We report a number of findings. First, from an expected utility perspective, neither the rational investor nor the CPT investor achieves a risk-adjusted return or certainty equivalent return that significantly outperforms that of the naïve investor. Second, from a CPT utility perspective, the behavioural investor outperforms both the rational and naïve investors. Third, the CPT investor typically displays highly concentrated, lottery-like asset allocations, low turnover and highly stable portfolio allocations. Fourth, the addition of the investor's memory into the portfolio choice process increases both diversification and turnover, leading to improved investment performance. Finally, by allocating more weight to positively skewed assets and increasing portfolio concentration, the probability weighting function has more impact than the utility function on the behavioural investor's performance. Our results are robust to the choice of reference return, estimation sample size, probability estimates, the probability weighting function and portfolio weight constraints.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
We study the rapidly growing literature on the causal effects of financial education programs in a meta-analysis of 76 randomized experiments with a total sample size of over 160,000 individuals. ...Many of these experiments are published in top economics and finance journals. The evidence shows that financial education programs have, on average, positive causal treatment effects on financial knowledge and downstream financial behaviors. Treatment effects are economically meaningful in size, similar to those realized by educational interventions in other domains, and robust to accounting for publication bias in the literature. We also discuss the cost-effectiveness of financial education interventions.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
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