The Impact of the COVID-19 Confinement on the Financial Behavior of Individual Investors

36 Pages Posted: 13 Nov 2020

See all articles by Randy Priem

Randy Priem

Financial Services and Markets Authority (FSMA); Saint-Louis University, Brussels; KU Leuven; Financial Services and Markets Authority (FSMA); United Business Institutes

Date Written: November 12, 2020

Abstract

This article explores the impact of the COVID-19 lockdown in Belgium on the financial behavior of individual investors. Specifically, the article is the first to examine whether exceptional market circumstances have induced individual investors to increase their equity positions. Using a proprietary database of almost 6,5 million individual investor transactions, this article shows that most individuals used a contrarian strategy thereby buying shares when stock prices are falling. Especially investors between 18 and 35 years old and those being less experienced are found to increase their equity positions compared to other age and experience categories. Male investors seem to dominate equity markets in Belgium, even during the COVID-19 confinement period, and they increased their equity positions more in comparison to women. The patterns documented in this article are robust for the shares being constituents of the main Belgian equity index (i.e. Bel 20), for all listed shares on Euronext Brussels, and for small caps.

Keywords: individual investors, investment strategy, equity investments, COVID-19

JEL Classification: D53, E22, E32, E44, G01, G41

Suggested Citation

Priem, Randy and Priem, Randy, The Impact of the COVID-19 Confinement on the Financial Behavior of Individual Investors (November 12, 2020). Available at SSRN: https://ssrn.com/abstract=3729202 or http://dx.doi.org/10.2139/ssrn.3729202

Randy Priem (Contact Author)

Saint-Louis University, Brussels ( email )

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Brussels, 1000
Belgium

Financial Services and Markets Authority (FSMA) ( email )

Rue du Congrès/Congresstraat 12-14
Brussels, 1000
Belgium

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Financial Services and Markets Authority (FSMA) ( email )

Rue du Congrès/Congresstraat 12-14
Brussels, 1000
Belgium

United Business Institutes ( email )

Naamsestraat 48
Brussels, 1000
Belgium

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