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COVID-19 and Investor Behavior

Finance Research Letters, 101717, Doi.org/10.1016/j.frl.2020.101717

TAF Working Paper No. 54/April 2020

TRR 266 Accounting for Transparency Working Paper Series No. 25

19 Pages Posted: 3 May 2020 Last revised: 5 May 2021

See all articles by Regina Ortmann

Regina Ortmann

Paderborn University; TRR 266 Accounting for Transparency

Matthias Pelster

University of Duisburg-Essen - Mercator School of Management; european center for financial services (ecfs)

Sascha Tobias Wengerek

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

Date Written: May 22, 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. Investors, on average, increase their brokerage deposits and open more new accounts. 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 on March 12, investors significantly reduce the usage of leverage.

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 (May 22, 2020). Finance Research Letters, 101717, Doi.org/10.1016/j.frl.2020.101717, TAF Working Paper No. 54/April 2020 , TRR 266 Accounting for Transparency Working Paper Series No. 25, Available at SSRN: https://ssrn.com/abstract=3589443 or http://dx.doi.org/10.2139/ssrn.3589443

Regina Ortmann

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098
Germany

TRR 266 Accounting for Transparency ( email )

Warburger Straße 100
Paderborn, 33098
Germany

Matthias Pelster (Contact Author)

University of Duisburg-Essen - Mercator School of Management ( email )

Lotharstraße 65
Duisburg, Nordrhein-Westfalen 47057
Germany

european center for financial services (ecfs) ( email )

Lotharstraße 65
Duisburg, 47057
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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