COVID-19 and Investor Behavior

TAF Working Paper No. 54 / April 2020

25 Pages Posted: 3 May 2020 Last revised: 6 May 2020

See all articles by Regina Ortmann

Regina Ortmann

University of Paderborn; Vienna University of Economics and Business

Matthias Pelster

Paderborn University

Sascha Tobias Wengerek

Paderborn University - Faculty of Business Administration and Economics - Department of Taxation, Accounting & Finance

Date Written: April 1, 2020

Abstract

How do retail investors respond to the outbreak of COVID-19? We use transaction-level trading data to show that investors significantly increase their trading activities as the COVID-19 pandemic unfolds, both at the extensive and at the intensive margin. The average weekly trading intensity increases by 13.9% as the number of COVID-19 cases doubles. The increase in trading is especially pronounced for male and older investors, and affects stock and index trading. Following the 9.99%-drop of the Dow Jones Industrial Average on March 12, investors significantly reduce the usage of leverage across all asset classes.

Keywords: Trading Behavior, Risk-Taking, Pandemic, COVID-19

JEL Classification: G10, G11, G12, G40, G41

Suggested Citation

Ortmann, Regina and Pelster, Matthias and Wengerek, Sascha Tobias, COVID-19 and Investor Behavior (April 1, 2020). TAF Working Paper No. 54 / April 2020 . Available at SSRN: https://ssrn.com/abstract=3589443 or http://dx.doi.org/10.2139/ssrn.3589443

Regina Ortmann

University of Paderborn ( email )

Warburger Str. 100
Paderborn, D-33098
Germany

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Matthias Pelster (Contact Author)

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098
Germany

Sascha Tobias Wengerek

Paderborn University - Faculty of Business Administration and Economics - Department of Taxation, Accounting & Finance ( email )

Warburger Str. 100
Paderborn, D-33098
Germany

HOME PAGE: http://www.upb.de/finance

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