Investors’ Risk Attitudes in the Pandemic and the Stock Market: New Evidence Based on Internet Searches

BIS Bulletin No. 25 (2020)

9 Pages Posted: 3 Aug 2020

See all articles by Marlene Amstad

Marlene Amstad

Harvard Kennedy School; The Chinese University of Hong Kong, Shenzhen

Giulio Cornelli

Bank for International Settlements (BIS)

Leonardo Gambacorta

Bank for International Settlements (BIS); Centre for Economic Policy Research (CEPR)

Fan Dora Xia

Bank for International Settlements (BIS) - Monetary and Economic Department

Date Written: June 26, 2020

Abstract

The sharp drop and subsequent rebound in global stock markets in the current pandemic focuses attention on changes in investors’ risk attitudes. A new COVID-19 risk attitude (CRA) index for 61 markets, based on internet searches in Google and Baidu, does a good job at capturing investors’ attitudes toward pandemic-related risks. Stock markets are more sensitive to changes in the CRA index in more financially developed economies. Stock markets are less sensitive in jurisdictions that have restricted mobility less and that have enacted other containment measures against the pandemic.

Keywords: COVID-19, equity market, sentiment, risk attitude

JEL Classification: G15, G01, G02

Suggested Citation

Amstad, Marlene and Cornelli, Giulio and Gambacorta, Leonardo and Xia, Fan Dora, Investors’ Risk Attitudes in the Pandemic and the Stock Market: New Evidence Based on Internet Searches (June 26, 2020). BIS Bulletin No. 25 (2020), Available at SSRN: https://ssrn.com/abstract=3654374

Marlene Amstad (Contact Author)

Harvard Kennedy School ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

The Chinese University of Hong Kong, Shenzhen ( email )

Giulio Cornelli

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Leonardo Gambacorta

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Fan Dora Xia

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

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