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Herd Behavior in Financial Markets: A Review

33 Pages Posted: 28 Jun 2000  

Sushil Bikhchandani

University of California, Los Angeles - Anderson School of Management

Sunil Sharma

Multiple version iconThere are 2 versions of this paper

Date Written: March 2000

Abstract

Policymakers often express concern that herding by financial market participants destabilizes markets and increases the fragility of the financial system. This paper provides an overview of the recent theoretical and empirical research on herd behavior in financial markets. It addresses the following questions: What precisely do we mean by herding? What could be the causes of herd behavior? What success have existing studies had in identifying such behavior? And what effect does herding have on financial markets?

Keywords: Herd behavior, momentum strategies, financial markets

JEL Classification: G1, G2, F4

Suggested Citation

Bikhchandani, Sushil and Sharma, Sunil, Herd Behavior in Financial Markets: A Review (March 2000). IMF Working Paper No. 00/48. Available at SSRN: https://ssrn.com/abstract=228343 or http://dx.doi.org/10.2139/ssrn.228343

Sushil Bikhchandani

University of California, Los Angeles - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095
United States
310-206-2686 (Phone)
310-825-1581 (Fax)

No contact information is available for Sunil Sharma

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