Individual Investors and the Financial Crisis
43 Pages Posted: 15 Mar 2011 Last revised: 20 Nov 2015
Date Written: March 12, 2014
This paper studies the trading behavior of individual Chinese investors before and during the recent financial crisis.We have three major findings: (i) individual investors did not withdraw their capital from the equity market during the crisis; instead, they reduced investments following portfolio gains; (ii) the asymmetric net flow decisions are strongly influenced by the disposition effect, in the absence of tax effects; this fi nding holds over our entire sample period and it is even stronger during the crisis; (iii) individual investors revised their portfolios to hold relatively safer and more liquid stocks.
Keywords: individual investors, financial crisis, net flows, portfolio risk
JEL Classification: G01, G11, G15
Suggested Citation: Suggested Citation